Google Acquire On2

Google's acquisition of On2 is a curious turn of events.

As the world standardises on H.264 the value of On2's proprietary codecs diminishes and there are free and open source versions of encoding software available which, in my view, do as good or even better jobs in encoding video.

On2 provides the encoding engine and codecs for Adobe, and I always believed that it made sense for these two companies to merge.

So, Google get a bit more insight into what Adobe and Nokia are up to and inherit a decent engineering team who understand codecs. The consideration of just over $100m hardly dents Google's cash mountain, but I'm genuinely surprised at this acquisition. I guess one of the key objectives is to improve quality and therefore reduce the cost of delivery for YouTube (H.264 is a codec that performs very badly at low data rates).

If nothing else, it proves that Google are serious about owning video online.