Wild Guesses Abound About Google’s Gaming Plans

The blogosphere abounds with questions about Google’s purchase of video compression software maker On2 Technologies.

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.

eWEEK spoke to Gartner analyst Andrew Frank, who blogged about the On2 buy here Aug. 5. Frank said he believes the purchase shows Google’s interest in leveraging our living rooms for Web services. Think about the targeted advertising possibilities that come with Android set-top boxes and Chrome OS-based televisions.

Frank said he believes Google is trying to embed itself more deeply in the online video space, beyond just the YouTube entry point. Adobe’s Flash, which leverages On2’s VP6 codec but is moving to the MPEG H.264 format, powers the bulk of online video, while Sun Microsystems’ JavaFX platform is embedded in the infrastructure of most standard advanced television platforms.

Google can leverage the On2 assets against H.264 to make sure video compression remains competitive and nonexclusive.

“It may chose to open-source the technology to achieve these goals, as has been its pattern with other core technologies, but in any case they can use the acquisition to assure [that] the quality and economics of online streaming continue to improve,” Frank wrote in his blog post.

Frank further said he believes that Google needs On2 to ensure that the public Web is piped in high definition without cable, satellite or IPTV providers charging for quality of service or limiting video access to screens.

“For over-the-top video to really work at a scalable level, you really need pretty good compression to get the quality,” Frank told eWEEK. “This would allow Google, for example, to deliver ‘out-of-band’ advertising options to broadband-connected set-tops that could be targeted using Google technology.”

The wildest theory about how Google will leverage On2 comes from eWEEK reader Gaetano Marano, who suggested that the On2 codecs will be used in a secret Google gaming console the company is building to challenge the Microsoft Xbox, Sony PlayStation 3 and Nintendo Wii.

Of course, that is wild conjecture, but so is everything at this point because Google has declined to discuss its plans for On2.

What do you think Google will do with On2? Will it be for a gaming platform?