The rumours are true. Google has bought advanced video codec creator On2 Technologies.

On2 are famous for creating the VP6 codec made insanely popular by Macromedia’s Flash and therefore the cornerstone of video on the web.

However, whilst the quality is very good and the installed base is wide if not pretty universal, it’s not perfect. There’s lots of reasons why a move to a more modern codec is a Good Thing – scalability, streaming, mobile devices, high definition, open standards and so on.

The MPEG4 iteration known as H.264 was tipped to be the next big thing, adopted by Flash and QuickTime, and open enough for 3rd parties to write competing software products and make hardware accellerated encoding options.

So why has Google gone and bought On2? Why hasn’t it gone with the flow towards MPEG4/H.264?

I can only speculate, but for one thing it may be to do with licensing.

The MPEG consortium generates revenue by charging a license fee to use its products. It’s not Open Source! This is why Apple have to charge extra for the ‘Pro’ component of its QuickTime Pro, which enables MPEG2 encoding and decoding. Furthermore, if you’re creating a lot of ‘units’, the MPEG consortium will want a royalty. This cuts in at around 10,000 units if memory serves me correctly, so it doesn’t really touch most of us. But it does touch big players like broadcasters, and… YouTube.

Macromedia chose to go with On2 because On2 could provide them a superior technology with absolutely no hidden gotchas to do with volume licensing. Flash video could take over the world and no alarm bells would ring in a lawyer’s office to start the collection of fees.

I think I prefer this speculation rather than anything about Google being anti-Apple and not adopting H.264 going forward. After all, YouTube’s HD service is really rather good and firmly based on H.264.

On2 made Flash video ‘work’ but it has remained firmly in the background, and has quietly got on with extending and improving VP6 and has new technology ready to play with.

So even if it’s not licensing, maybe it’s simply because Google wants the ‘Next Big Thing’ in web video which sadly can’t be QuickTime becuase that’s an Apple-only technology. It may even be a Good Thing for those wanting to embed markers and events in live video just like Real and WMV.

After all, it’s another standard to choose from.