Why Google Purchased On2

Today Google announced it will buy mobile video codec company On2 Technologies for $106.5 million in stock. While Dan Rayburn does a great job of pointing out why this deal wasn’t done, I submit the reason has more to do with video distribution market in homes and on the go. Rayburn elaborates when he says this deal was likely not done for the codec alone. I would say it has more to do with the video technology itself as well as the need to integrate the giant backend of YouTube content with mobile devices of all types. I believe this plays into yesterday’s tablet discussion as well. This gets me thinking we will see tablets based on Google’s Chrome OS. If Google believes the market for tablets and netbooks will merge with entertainment then this move makes good sense.

We will have to wait and see where the company’s head is at but it seems to me this purchase is a bet by the search leader that video will continue to be shown on virtually all devices which run on electricity.

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