Google recently acquired On2, a company that creates video codecs, most notably for Flash (which is used on the most popular video sites). Dan Rayburn runs down and debunks a number of theories as to what Google has in mind. Rightly, he says that none are obviously correct.
(Side note, I’ve used On2’s Flix products for some time.)
I don’t think Google has an immediate tactical goal with the acquisition. They are delivering video just fine without owning the technology.
But that may be the point. Google didn’t need to create a web browser either – but by having one, they ensure some control over the direction of the technology. There will always be a browser that serves their needs, if the other players can’t be controlled.
With the On2 purchase, Google is putting itself in a similar position. They can ensure that Flash video will not be snuffed by Apple or Microsoft, or dictated by Adobe.
It’s one more piece of the (client) platform over which they have control. Google didn’t own a video technology that runs on your computer; now they do. Perhaps a Google Media Player is not far off?
Another tactical thought: this is a chess move in preparation for an acquisition of Adobe. (Adobe has not just Flash but PDF too.) You know Apple has thought about acquiring Adobe for years. By owning some of the main codecs underlying Flash, Google controls a bit of Adobe’s destiny – making Apple’s would-be takeover that much harder. $100M is damn cheap for that bit of leverage.
There was already a Google Video browser plugin based on MPEG-4. I don’t see why they’d need to buy On2. As someone said, $100M pays for a [b]lot[/b] of MPEG licenses.
I’ve also read that Adobe has a royalty-free perpetual license for the VP6 decoder, so it doesn’t really matter what happens to On2.