Breaking Down The Google/On2 Acquisition
This past week, Google made the news yet again in online video, buying the company On2 for $106.5 million in stock. In talking to colleagues and scrolling through the blogosphere, I find there seems to be a significant amount of confusion surrounding this deal (myself included). Looking at the deal and its implications more closely, here's what I've found:
What On2 does: On2's key product is focused on video compression. A smaller (more compressed) file size means several things: faster download times, fewer delays and lower bandwidth usage. On2 also has software that optimizes video for both mobile and digital televisions.
The obvious reason why this matters to Google: On2 will make YouTube better and more profitable. Despite the recent positive messages on the site's revenue and eventual profitability, it's clear that YouTube is expensive to run because of the sheer volume of video that is uploaded and viewed each day. On2 is a solution to lower the cost of operating the site while at the same time delivering higher quality video. Sidebar on video quality -- On2 powers the current king of quality video, Hulu.
The other obvious reason why this matters to Google: mobile. While mobile is still one of the most polarizing topics out there, most agree that Google is positioning itself to be a force to be reckoned with when mobile finally does hit critical mass. On2 gives the company a solution to deliver quality mobile video on Android as well as on other handsets.
Other companies that this matters to: Adobe and Microsoft. Currently, Flash and Silverlight are the delivery platforms of choice. The On2 codec now gives Google the ability to drive adoption of its HTML5 plugin, which is currently supported by Chrome.
Hopefully, the strategic reasons for the deal make sense now: efficiency today and securing the right technology for future products. Seems like all the right reasons.
(Thanks to Dave Otten and Jeroen Wijering of LongtailVideo.com for their input and explanations for this Insider.)
0 comments on "Breaking Down The Google/On2 Acquisition".
Leave a Comment
Eric Franchi is the co-founder of Undertone. Contact him Recent Video Insider Articles
-
Online Advertising: The Era Of Lowered Expectations May 21, 1:01 p.m.
Eric Schmidt dubbed advertising the last bastion of unaccountability in corporate America, and judging by the ...
-
Three Lessons Digital Video Advertisers Should Learn from Direct Marketing May 20, 6:13 p.m.
As a consumer, I often see pre-roll ads on my phone, Roku, Wii, tablet and PC. ...
-
Once Again: Are You STILL Making These Fatal Video Content Mistakes? May 17, 11:10 a.m.
No one plans to make bad marketing videos. Yet, the majority of them ARE bad. And ...
-
Cable and Broadcast in TV Everywhere's Bed; In-Stream Engagement Strong May 16, 10:10 a.m.
Perhaps the most important story to emerge from the TV upfronts isn’t the next hot hour-long ...
-
What If Yahoo Bought TV Guide? May 15, 9:50 a.m.
I may be dating myself here, but I still remember when families sifted through the print ...
-
Mister Rogers: No Tattoos, But Wisdom To Spare May 14, 12:53 p.m.
Ten years after his death in 2003, Fred Rogers -- aka Mister Rogers -- is back ...
-
Content Is Consuming Us: If You Can't Beat 'Em, Join 'Em May 13, 12:53 p.m.
Two years ago, the inventor of the Web browser Marc Andreessen commented that software is eating ...
-
People Are People Are People: The Future Of Video May 10, 10:44 a.m.
“I think I just passed by Sarah Jessica Parker, and btw I’m much taller than her,” ...
-
Smart TV Reach Doubles, Tablet Owners Heavy SVOD Users May 9, 4:50 p.m.
Advertisers, take note: Consumers are getting savvier at connecting their TVs to the Internet, and interacting ...
-
Breaking The Bandwidth Barrier: Enabling Effective Video Ads May 8, 9:30 a.m.
On YouTube, four billion hours of video are viewed every month, and 72 hours of video ...
You hit the high points of why the technology matters to Google. But there is growing consensus from ON2 shareholders that this deal will not get done for $106.5 million in stock. Look for shareholders to block/stall the deal and more reasonably-valued bids to come forward.
Great article explaining On2's value propostion. I also agree with Dan that On2 might look for a better deal.
At the end of the day, dollars and sense fly off the ends of one's picks and shovels. The clues to where these comparative advantages can be found come from the practitioners and engineers.
Given the importance of moderating the size of files uploaded to YouTube and Google, they would serve themselves well to support ON2 rendering of FLV which is often as small as a tenth of MP4, WMV, and QuickTime. Additionally, Chrome and Wave need to step up to both the FLV endoding and the .SWF streaming plate.
Content Creators upload and encode to FaceBook using ON2-generated FLV because transmission and encoding times are lower (because it's already Flash), and because this practice delivers a superior stream in 720P and above.
These would be big benefits to YouTube and Google, which they have yet to embrace and enable.
Good article, thanks.
See also Webmonkey's piece about this deal - http://www.webmonkey.com/blog/Google_s_Latest_Acquisition_Renews_Hope_for_Open_Video_in_HTML_5