Ramifications of Google’s On2 Acquisition

Guest Blogger —  August 6, 2009

google-video-on2

There’s beginning to be some interesting commentary on the purchase of video codec company On2 by Google, see here, here and here. Much of the speculation understandably has to do with what this will mean for Google’s future with video, either via YouTube or in the Chrome browser and eventually OS. Within the specs for HTML 5 there is a push towards a simpler, more open video standard, with the open source Ogg Theora already getting some official support. Since On2’s earlier VP3.2 is the basis for Ogg Theora, some believe by purchasing On2, Google is likely looking to take their much more advanced VP7 and VP8 codecs open source and possibly license-free. Such a move would provide HTML 5 with very advanced video technology for free, and would create serious competition for other current codecs and/or platforms such as h.264, Flash, Silverlight, etc., while at the same time giving Google another point of real strength in future internet developments.

One question that I have yet to see answered sufficiently is how empowered Google would actually be to make such an aggressive move in regards to video technology. On2 claims that VP8 and their earlier technologies are completely patent free, unlike other video codecs like H.264 that have very complicated patent claims handled currently by the MPEG-LA licensing body. Even though there are excellent open source versions of h.264 encoders, such as x264, users still have take care of licensing with MPEG-LA. If Google could actually release VP8 technology as open source, or even if just royalty-free, codec, that would be a major disruption of the current video landscape and the future plans of many competing companies, including Adobe, Microsoft, Apple and DivX (full disclosure, I am a DivX stockholder). There have, however, been some rumblings about just how patent protected On2’s codecs really are. I don’t know enough to comment, other than to say that patents and video technology can be very, very complicated and messy.  In any case, there will certainly be much investigation and discussion around these issues before we see any major shifts from Google based on their purchase of 0n2.

Catch more of Bruce’s digital media musings over at Digitalwerks.

9 responses to Ramifications of Google’s On2 Acquisition

  1. Patent enforcement is at the discretion of the holder, or new owner Google in context of this post.

    Daimler-Benz owns the patent for air bags, but the choose not to enforce it, allowing every automobile manufacturer to install the lock-up-tighter-than-a-drum technology in their cars.

    You’ll see this same altruistic approach used for the VP7 codex.

  2. Todd are you kidding? If the MP4 consortium can find a way to stop Google in its tracks if the On2 codecs catch on – you can bet your bottom dollar that they will! There is a lot of money riding on this.

  3. @Dale Dietrich

    Sir, there is absolutely no way the MP4 consortium can stop Google from applying the same liberal Open Source license to On2’s VP7 codex, as they did with Android.

    Once VP7 is assigned an Apache license and combined with the HTML5 video tag, the MP4 consortium will cease to be relevant, and the death of the Flash, Quicktime and Silverlight browser plug-ins immediately thereafter.

    Better still, you can extrapolate Google open sourcing the VP7 codex beyond the browser and into STBs that run Android or the Google OS:

    “…In my 25 years in the electronics industry, I have never seen a new technology take off as quickly as this one.” said Art Swift, vice president for marketing at MIPS.

    Why this rush to adopt Android to a variety of devices? It’s well designed and versatile, Mr. Swift said. “It works on a variety of platforms. It’s easy to customize. It’s really a beautifully architected system. Once people saw how straightforward it was to move from a handset to a netbook, then it began to be an ‘aha’ moment: ‘What if I migrate this to a DTV or set-top box?’ ” he said.

    To date, products like digital TVs and set-top boxes have used a hodgepodge of proprietary software, often based on a version of the Linux operating system. Android brings much-needed standardization to the industry, according to Kevin Kitagawa, director of strategic marketing at MIPS.

    http://bits.blogs.nytimes.com/2009/08/05/googles-android-jumps-t-the-living-room/

    Open sources trumps proprietary – *ALWAYS*

  4. Todd said: “Sir, there is absolutely no way the MP4 consortium can stop Google…”

    Maybe not after acquisition is complete – but there is time for a bidding war, and if ultimate control of On2 and their tech is so important to Google and others for not only the US but Asian (On2 big in China) and eventual Global video market – expect the counter offers to start coming in. $106M is a steal for this potential Kingmaker, and many could easily double that offer given the potential “disruptive” market power On2’s tech puts in Google’s hands.

  5. @Yari

    Outbid Google? I’d like to see someone try. They make $5,000,000,000.00 a fiscal quarter ( $700.00 a second! )

    source: http://investor.google.com/releases/2009Q2_google_earnings.html

    Those are some *deep* pockets.

  6. @Todd – Adobe could do it and could justify it to their shareholders too if it meant protecting flash’s monopoly from being disrupted. This is an important acquisition for Google, but if they do plan on open sourcing the tech and writing off the acquisition, there will be a limit to the number of zeros they can use. As far as Adobe goes, this could easily cost their shareholder $2 billion in losses if the purchase goes through. You could also see Microsoft step in to protect Silverlight, although I’m not sure that FTC would greenlight that merger.

  7. On2 video compression is based on patents owned outright by the company and are not infriging on another compression software providers intellectual property. If Google acquires the company then it could choose to open source the technology, i.e. give it away for free. Will they do it? Who knows but that potential should be giving nighmares to Google competitors. Will it result in a bidding war by others to wrest control of On2 away from Google. Again who knows. Adobe and certain other big Google competitors (Sun now Cisco) have licensed On2 VP codecs (Adobe VP6 and VP7, but not VP8, for Flash and Sun VP7 for Java. If one hypothesizes a bidding war to break out one would be left to wonder why nobobody else (Adobe or Sun/Cisco especially) has tried a run at buying On2 before now or isn’t already upping the ante. In the event Google closes the deal at the $.60 per share offer their acquisition looking back in a couple of years could prove to be one of the most incredible steals of enabling technology ever made. And the excutives of On2 who went for this deal ought to have their portraits hung on the Wall of Shame as either the most stupid or most corrupt executives (maybe both) in recent memory.

  8. DRW

    BRAVO. LE PLUS GRAND VOL D’UNE TECHNOLOGIE.

  9. They can open-source VP7 all they like but Google is going to get the bandwidth “bank for the buck” (sic) out of VP8. Of course On2 never came out with the SDK like they promised did they? So you guys have never heard of VP8…. or did you?