Google Buys ON2 Technologies To Cut Youtube Costs

Google Inc. on Wednesday announced its plans to snap up On2 Technologies Inc., a company known for offering digital video compression technology, a move that is likely to help the internet search giant trim down its costs for running its popular video platform YouTube.

The new acquisition deal, which will be valued at a whopping $106.5 million, would offer the technology to compress the size of video files so they can be transferred over the web in an easier manner.

Touting the company’s new initiative to move ahead to acquire On2 Technologies, Sundar Pichai, Google’s VP for Product Management, said in a statement, “Today video is an essential part of the Web experience, and we believe high-quality video compression technology should be a part of the Web platform.”

He further went on to say that the technology from On2 would help Google to bolster up the video quality currently being offered on the internet.

Some analysts are also of the opinion that Google would integrate the newly acquired technology into its Chrome web browser to make it more robust against rivals like Microsoft Internet Explorer and Mozilla Firefox.

In a related story, Google has further notified that it was selling its radio business arm to a California-based online ad company WideOrbit for an undisclosed sum.

Our Comments

The acquisition of ON2 will probably pay for itself in the first year as Google saves huge amount of bandwidth. Google could also plan to integrate ON2 into its own browser which would be a step towards making Chrome a bit more like Internet Explorer (for the wrong reasons).

Related Links

Google Acquires On2 Technologies

(Information Week)

Google bolsters its video with On2 buy


Google backs out of radio, buys video firm for $100m


Google bolsters internet video

(Financial Times)

Video-compress tech could help lower YouTube costs

(Associated Press)

Google deal would boost YouTube