Google (more info) is in the process of acquiring a video compression company On2 Technologies (more info) formally known as The Duck Corporation. The deal is expected to be done by Q4 after approval from On2 share holders. On2 is a leader in video compression technologies and power high-quality video in both desktop and mobile applications. The deal is worth $106.5 million. Here is what Sundar Pichai, VP, Product Management, Google had to say in his blog post

“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”

Now why is Google interested in this deal?

1). This is a very strategic step by Google and this deal shows clear ambitions of Google- It wants to own a video technology like its rivals. MS – Silverlight, Apple – Quicktime, Adobe – Flash.

2). On2’s video compression technologies VP8 is considered a very close competitor H.264 and this could boost YouTube and make it much smoother. Android (more info) and the upcoming Chrome OS could also benefit hugely from this deal.

3). Google might also open source video codecs standards of On2 which could make it more acceptable than H.264.

Follow-Up

Silicon Alley Insider : Google’s On2 Acquisition Could Revolutionize The Video Industry (GOOG, MSFT, ADBE) by Dan Frommer

GIGAOM : Google: You Buy Some, You Sell Some by Om Malik

TechCrunch : Google Acquires Video Compression Technology Company On2 For $106 Million by Robin Wauters

Mashable! : BREAKING: Google Acquires Video Compression Company for $106.5 Million by Pete Cashmore