Does Google Want On2 for a Gaming Console?

The blogosphere abounds with questions about Google's Aug. 5 purchase, a $106.5 million stock bid for video compression software maker On2 Technologies. The leading question seems to be: Wherefore On2?

Google owns YouTube, the world's leading video-sharing Website, which streams 1.5 billion video clips every day.

On2 makes On2 Video, a line of codecs that could compress video piped through YouTube for easier transmission over the Internet and cellular networks. On2 also makes video encoders that output Adobe Flash, Sun's JavaFX video and H.264 video for Apple's iPhone and iPod. On2 counts Amazon.com, Disney and Microsoft as encoding customers.

Finally, On2 designs embedded video codecs for chip sets and devices such as mobile phones, mobile Internet devices, set-top boxes, games decks, digital TVs and DVD players. Nokia, Samsung and Sony use these technologies. ZDNet breaks down the On2 assets, showing that they are woven intricately across a broad swath of digital devices and applications from various vendors working or dabbling in video.

Why On2 indeed? There are many theories, but a few will likely suffice.

Google may want video compression technology to support its YouTube video-sharing site, which is approaching profitability, according to Google executives. Some believe Google wants to leverage On2's assets for its Chrome browser, its Android mobile operating system and, eventually, its Chrome Operating System.

After all, companies that want to play in video have developed their own proprietary video technologies. Adobe has the market-leading Flash, Apple has QuickTime and Microsoft has Silverlight in the hopper. Google surely desires to include native video capabilities in Android, Chrome and Chrome OS without relying on rivals' technology.

Perhaps Google will take the On2 video codecs and open-source them, giving corporate customers a lower cost barrier to entry than the proprietary options. It would certainly fit with Google's modus operandi of open-sourcing just about any technology that isn't search- or advertising-related.

Next: Other Possible Google Plans for On2 >>