c1c.me

Note: Google completed their acquisition of ON2 in early 2010. I will leave some details of this post for reference purposes to see if/how Google capitalizes on ON2's technology

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VP8 - better quality than H.264 (see the demo)

VP8 codec claims to average 40% lower bandwidth size over H.264. If this is true, this blog post from ON2 shows how a 20% bandwidth savings results in over $5B in annual savings on projected video bandwidth by 2012. http://www.on2.com/blog/2008/08/better-video-compression-is-key-to-stemming-the-exaflood/  (note ... $5B in savings does not include datacenter cost)

Didn't Apple briefly stop orders for iPhone in NYC due to bandwidth (that was the rumor)? How much of the bandwidth on iPhone is video now? How much will it be when VEVO ramps up with HD video? Couldn't the 'superphone' with a significant advantage in video bandwidth have a significant competitive advantage with both consumers and operators?

What does it cost to store exabytes of video in datacenter (equipment, power and cooling)? YouTube is supposedly costing Google $700M a year to operate today and I'd imagine most of the video they have stored currently is not HD. An article in Slate  http://www.slate.com/id/2216162/ says  YouTube bandwidth costs Google $360 million a year. Should someone decide to compete against YouTube and be able to operate at 40% less cost (if someone else besides Google acquires ON2), that would be a significant margin advantage to compete.

VEVO launched but not with HD (coming later in 2010). Are they planning to use ON2's VP6, VP7, VP8? Wouldn't MPEG LA fees kick in for commercial content if HD was streamed with MPEG-4 ? What would that add up to for fees for all major labels ? The article in Slate   http://www.slate.com/id/2216162/  quotes Credit Suisse saying YouTube spends about $250 million a year to acquire licenses to broadcast professionally produced videos.

ON2's Hantro chip CPU cycle/Power savings for end devices http://www.on2.com/index.php?342 , and "compared to commercially available software solutions for digital signal processors (DSPs), the 9190 is up to 11 times more power efficient, consuming less than 50 milliwatts for HD video decoding, and less than 10 milliwatts when decoding SD video." http://www.on2.com/index.php?549  . Couldn't this make huge difference in battery life on an iPhone or Android phone for heavy video users?

What would the cumulative competitive benefits and reduce operations costs total for Google's Nexus One, YouTube, VEVO?  Given all of the above and the recent introduction of the Nexus One "superphone", it's difficult to ballpark. $500M a year? $2B a year? More? I'd say that a conservative estimate of the savings to Google could be $1 billion per year looking forward just 3 years to 2013. That would represent a huge operational cost advantage over competitors.

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• Google
• ON2
• Codec
• Bandwidth
• Storage
• Battery life
• Video
• exabytes
• VP8
• H264
• iPhone
• Nexus One
• Android
• VEVO
• HD
• MPEG LA