http://googleblog.blogspot.com/2009/08/innovation-in-video-on-web.html

<<8/05/2009 05:02:00 AM
Today, video is an important part of many people's everyday activities on the Internet and a big part of many Google products.

Because we spend a lot of time working to make the overall web experience better for users, we think that video compression technology should be a part of the web platform. To that end, we're happy to announce today that we've signed a deal to acquire On2 Technologies, a leading creator of high-quality video compression technology.

The deal is still subject to approval by On2 Technologies' stockholders and review by relevant regulatory authorities, including the SEC, but we expect it to close in Q4.

Although we're not in a position to discuss specific product plans until after the deal closes, we are committed to innovation in video quality on the web, and we believe that On2 Technologies' team and technology will help us further that goal.>>

http://on2.com/index.php?id=472&news_id=681

<<CLIFTON PARK, NY and MOUNTAIN VIEW, Calif. (August 5, 2009) – On2 Technologies, Inc. (NYSE Amex: ONT) and Google Inc. (NASDAQ: GOOG) jointly announced today that they have entered into a definitive agreement under which Google will acquire On2, a leading developer of video compression technology. Under the terms of the agreement, each outstanding share of On2 common stock will be converted into $0.60 worth of Google class A common stock in a stock-for-stock transaction. The transaction is valued at approximately $106.5 million.>>

I suspect that Google will open source VP8 and the codec will become the most likely candidate for the HTML5 video support.

Who said "it's crisis?" :-)

Ionut Alex. Chitu
I would go crazy if they do open source it.
But how will they justify the $100 million that they paid?

That was also my reaction, Ionut. Why would Google acquire a proprietary format when they are pushing so hard for HTML5?

<< But how will they justify the $100 million that they paid? >>

Other companies might buy it (think Microsoft, Adobe, Apple) and the codec would continue to be proprietary. Another reason would be to solve HTML5's video codec dilemma: http://tech.slashdot.org/article.pl?sid=09/07/06/1759225 .

<< Why would Google acquire a proprietary format when they are pushing so hard for HTML5? >>

To set it free.

That was a rhetorical question, I was using it to justify my conclusion, which was also yours...

If Google do so, and release the CODEC as Open Source, it will be a dream come true, A move to cheer for...

Considering the HTML5 vide bedate it is interesting that:
"Apple and Google favor H.264 while Mozilla and Opera favor Ogg Theora"

The link between ON2 and the codec to use is that Theora is based on ON2's VP3 codec. So Google's move is to acquire the company that developed VP3 which superficially would look like Google is switching sides.
Theora however does not seem to be the best choice, but it is royalty free.

The big question now is what Google's intentions are. Will they offer another of ON2's codecs to become the acceptable (royalty-free?) codec for all parties?

The VP8 codec seems to be very interesting and even if the parities in the HTML5 video debate don't solve their differences Google may acquire the technology to high-quality/low bandwith video streaming which they can use in Google Video/Youtube, etc.

Xiph.org Ogg Theora: http://en.wikipedia.org/wiki/Theora

From slashdot's coverage:
http://tech.slashdot.org/story/09/08/05/1742249/Google-Acquiring-VP3-Developer-On2-Technologies

"BetaNews is reporting that Google is acquiring On2, the video codec company and original developers of the VP3 codec from which Theora is derived. The article suggests that this may mean Google is backing Ogg Theora as the HTML5 video standard, but this is likely not the case--with Theora already being open-source and On2 having disclaimed all rights and patents, there is no reason Google should have needed to do this to push Theora. You may recall from some time back that HTML5 no longer specifies which video codec(s) a browser should support due to there being, unfortunately, no suitable codec at this time. But Google (known for supporting H.264) practically owns Web video with YouTube in most people's minds, so their influence could really swing the future of HTML5 video either way. It remains to be seen whether Google's acquisition of On2 has any bearing on their plans for video on the Web."

-via http://www.betanews.com/article/Future-of-open-Web-video-may-change-with-Google-acquisition-of-On2/1249481107

While Google is buying a company, they are selling another one....
http://www.socaltech.com/goodbye_dmarc_google_sells_radio_automation_assets/s-0023252.html

Oh, so that's how they paid for On2.

I doubt it was hard for Google to come up with 136 million xD

Ionut Alex. Chitu
>>I suspect that Google will open source VP8 and the codec will become
>>the most likely candidate for the HTML5 video support.

I think I know why Google might want to do this...

Adobe has been dominating Online Streaming Video market, particularly in Flash & H.264 codec. It's not good for YouTube's future.

Are you guys thinking what I'm thinking?

Maybe by open sourcing VP8 and possibly making it part of HTML5, YouTube can offer it's services without any interference of Adobe?