Google spends big on video compression

Google appears to be betting big on the growth of online video. With RJ jacks becoming almost as common as dirt on larger consumer TV’s it’s probably a good bet. Online video will continue to grow exponentially, with available bandwidth becoming the most limiting factor.

Google and On2 Technologies jointly announced today that they have entered into a definitive agreement under which Google will acquire On2, a developer of video compression technology. The acquisition is expected to close later this year. On2 markets video compression technologies that power high-quality video in both desktop and mobile applications and devices and also holds a number of interesting patents.

Some of its codec designs are known as VP3, VP4, VP5, TrueMotion VP6, TrueMotion VP7 and VP8. Its customers include Adobe, Skype, Nokia, Infineon, Sun Microsystems, Mediatek, Sony, Brightcove, and Move Networks. On2, formerly known as The Duck Corporation, is headquartered in Clifton Park, NY.

Under the terms of the agreement, each outstanding share of On2 common stock will be converted into $0.60 worth of Google class A common stock in a stock-for-stock transaction. The transaction is valued at approximately $106.5 million. (Tech Crunch)

Making the most of available bandwidth is a good defensive move for anyone distributing content online. Never the less, lack of available last mile bandwidth will continue to keep a choke hold on how much content can be delivered to consumers.  I have to wonder how long Google and other content producers and distributors will tolerate the duopoly limiting the potential to  grow their businesses going forward.