Debunking Some Myths Of The Google/On2 Deal, Questioning VP8’s Quality

Following up on my earlier post today entitled "Google's Acquisition Of On2 Not A Big Deal, Here's Why", here's some more thoughts on the subject. While clearly no one, including me, truly knows what Google plans to do with On2, a lot of potential scenarios being discussed on the web revolve around facts that just aren't accurate. I'm all for having a discussion on what Google may or may not do with the On2 assets, but a lot of folks are using bad info to come up with their logic behind what Google may or may not do. Here are some of the "myths" I keep hearing or reading about:

  • Google will no longer have to pay Adobe a license fee for using Flash on YouTube: The reality is that Google does not stream videos from a Flash server using the Flash streaming protocol of RTMP. Since all YouTube videos are delivered via HTTP, progressive download, Adobe is not getting any license fee from Google.
  • Adobe has to pay On2 licensing fees for support of the VP6 codec: Adobe paid a one-time fee to license VP6 for Flash years ago. They don't currently pay any royalty for VP6 and there is no reason why Adobe would have to pay Google any kind of license fee to continue to support VP6.
  • Google already uses VP6 for YouTube: YouTube has not used VP6 for their videos. They originally started off by using H.263, Spark, and added H.264 support for their HQ and HD videos. 
  • Google will now be able to "speed up" YouTube videos: Being able to speed up the delivery of video primarily rest in how the content is delivered and the server and protocols used. While compression does play some role in this, the ability to "speed up" the delivery of videos primarily comes from the infrastructure side of the ecosystem, not the encoding. On2 has no server component so even if Googe adopted VP7 or VP8, don't expect the poor buffering times on Google to be fixed.
  • Acquring On2 will allow YouTube to save on bandwidth costs: Again, while the rate of compression has an impact on the number of bits being delivered, it is not the biggest factor involved in the costs of delivering video. Yes, if you can compress the file smaller and have better quality, you might be able to save some money, but typically when that happens you increase the bitrate and end up delivering more bits at higher quality. And with YouTube moving to HQ and HD video, they are delivering more bits, not less. They didn't spend $100M to save on bandwidth costs.
  • Because of On2's encoding products, it might save Google some money in electricity costs and server hardware: The reality is that On2's transcoding based service runs off of Amazon and I don't see Google cutting checks to Amazon over the long run to keep this service up and running. While On2's Flix encoding software could have some value to YouTube in helping them ingest and transcode videos, the savings they would see, if any, would not warrant the $100M price tag.
  • On2 could have a big impact on video quality and delivery of YouTube: Again, it won't have much impact on the delivery aspect. Could it have an impact on the quality? Possibly. But until we see VP8 in action, no one truly knows.

As for the issue surrounding the quality of VP8, we don't know how good the codec is. I have been getting a lot of calls and questions asking me why I think the quality of VP8 is not as good as H.264. I never said the quality was not as good, I said, "Everyone is assuming the quality is better than H.264, but is it?" It may be, but the point is, we don't know. I have spoken to two content owners who were using VP8 under beta and told me there were not impressed. On2 announced VP8 back on September 13th of 2008 and nearly a year later, where is the adoption? Not to mention, the subtitle of the On2 release says "On2 video delivers over 50% bandwidth savings compared to leading H.264 implementations." That may be, but where is the data to prove it?

For nearly the past year, StreamingMedia.com has made multiple requests to On2 to let us get hands on with VP8 so we can compare it for ourselves, just as we did in 2006, when Jan Ozer produced a 100 page report comparing all of the Flash video codecs. To date, we've not been given anything to test with VP8 and it's worth noting that the H.264 sample clips that On2 uses on their website and at tradeshows as comparison to VP8, are not optimized H.264 videos, so the comparison is not fair.

Is VP8 really better than H.264 from a quality perspective? It may or may not be. The point is, let the industry get hands on with it and test it themselves. I'm sure many will say it must be better if Google is willing to acquire On2, but keep in mind we are all speculating that they even want to compete with H.264, which may not be the case. No on seems to be thinking about the potential live streaming aspect for VP8 which for low latency, real-time streams, could work just as good if not better than H.264 for bi-directional video chat applications like Google Talk.

Clearly we all have a lot of unanswered questions and hopefully soon Google will start to lay out a road map on what they plan to do, although considering they don't like to talk about things and the slow rate at which they move, I'm not holding my breath.

For more details on the subject of VP8's quality, see Tim Siglin's post from last year on StreamingMedia.com

  • Oliver

    Dan,
    from my point of view the reason for Googles planned acquisition of On2 is found in the current controvercy behind the HTML5 Video tags codec support.
    The HTML5 Video tag will put videos right into the browser, instead of just into a browser-plugin, like Flash, Silverlight or Quicktime. The initiative of the WHATWG interest group will make videos a native to the HTML-based web, just as text and images have been for years.
    As modern browsers like Firefox, Safari and Chrome are all available to a variety of different operating systems and computing devices, the browser-plugins for video playback usually aren’t, or at least with missing features as hardware-accelerated video-playback.
    Implementing video playback capabilities directly into the browser will take away most pains of delivering videos to the end user, and therefore the user experience will rise to an all new level.
    So whats the controversy I was talking about in the beginning? In the last weeks it became clear, that the WHATWG aka. developers of these modern browsers – Mozilla, Apple, Google, Opera – will not be able to agree on one single video codec to be supported with the HTML5 Video tag. Mozilla will support the open source Ogg Theora but not H.264, Apple will support H.264 but not Ogg, Google will support both. This controversy is due to licensing issues and corporate strategies.
    So at this point Googles acquisition of On2 Technologies comes in. Imagine if Google open-sources(!) one of On2’s video codecs, e.g. VP8, than the web would have it’s own royalty-free, high quality video codec. Mozilla, Apple, Google, Microsoft, Opera – all could implement VP8 support for their browsers HTML5 Video tag.
    We have seen before that Google ‘donates’ foundational technology to the open source community in order to then generate new revenue through it – e.g. Android, Chrome OS.
    At the end of the day, our alls value-add business in the world of streaming media remains with an high quality, open source video codec. I believe there would be even more business for high quality live-encoders, professional streaming servers, worldwide CDNs, and so forth, because video will finally be a true ‘native’ for the web-audience.
    What is your opinion?

  • http://publicopenspacedesign101.com/blog/blog.html Harry

    @Oliver & @Dan
    Here’s what I posted this morning on Apple’s Quicktime discussion list:
    “For those who love “competition” when it comes to codecs – the competitive war just heated up. Google, just bought On2/VP8 and apparently is going to Open Source VP8. Is it an end run around H.264 – to monopolize HTML5 video via Chrome, Google, YouTube, Mozilla and Opera? ”

  • http://www.ramprate.com Steve Lerner

    I think everyone is missing the boat on why this acquisition is happening. Google compete in the software market.
    Each major competitor has a proprietary OS, browser, media player, and application framework.Google has a (somewhat) proprietary OS, browser, and application framework- the only thing they are missing is the media player.
    Now they have it. What they do with it is just speculation- but the strategic reason behind the acquisition is pretty clear.

  • Pete Wylie

    Really interesting stuff Dan, but given the sticker price on this buy, there has to be a coherent rationale for how this enhances Google/YouTube’s video roadmap, right? Or is that expecting too much from the team there? If it’s not quality increase, as you allude, and it’s not cost-savings, as you argue, why buy On2? I liked Tim Siglin’s take on possibilities as well, and I know we can’t be sure what Google’s got up its sleeve with this one, I just have to think there is a clear avenue for deploying the VP8 codec. Or maybe the media player, as Steve above posits? Love to hear your thoughts.

  • http://profile.typepad.com/evanwolf Phil Wolff

    On2 is also known for delivering High Quality (640×480@30fps) Skype video. This may have little to do with YouTube and lots to do with Google’s Talk/Voice/Wave live conversation services. That, and bringing codec level talent in-house.

  • http://on10.net/blogs/benwagg Ben Waggoner

    On2 owns Hantro, who are experts in codec and media pipeline implementations on mobile devices, including DSP optimizations etcetera.
    Seems like Google could have interest in that team and software stack for Android and Chrome OS.

  • http://www.BusinessOfVideo.com Dan Rayburn

    Hey Pete, we’re all guessing here, but it’s possible that Google wants On2 for multiple reasons, not just one. People seem to be saying it’s VP8 or it’s Hantro or something else, but maybe the value is all the different pieces that somehow ties into many different areas inside Google. Who knows.
    What I don’t like about this is how many people want to already declare Google the winner when the deal isn’t even closed, won’t be for months and we have no idea what kind of traction Google will get when/if they even release anything.
    Sure, On2 could be worth something to Google, but we just don’t know yet.

  • http://robertreddick.com Robert Reddick

    Agree with Phil. This is about real-time, but add YouTube live, not just conference services.
    YouTube needs a live-streaming service, ala ustream.tv. High-quality live triggers license fees when they use Flash. Grab On2, and they can drive their own, and (via market forces) Flash live server license fees to zero. Layer in a game plan that uses YouTube and Chrome as a codec-bully-pulpit to get some tractions on the browser + media player standards and you have a winner.

  • http://on10.net/blogs/benwagg Ben Waggoner

    @Robert Reddick,
    What high license fees are you thinking of triggered by high-quality live encoding? Carrier-grade live encoders are expensive piece of gear, but every Mac and Windows PC shipped in the past decade is a free download away from live encoding.
    On2’s not historically been known for their live encoding technology. VP6 still single-threaded until quite recently, which is why we had high-latency temporal chunking grid encoders like those from Kulabyte and Move Networks.
    YouTube has used the open-source ffmpeg and x264 for their encoding so far, and which also support live. I don’t see what On2 would have worth $100M+ over that in particular.

  • ram

    On2 for Google.
    1.Extreme control over video quality for their google video services. I have spoken to algorithm experts at On2 during streamingmediaeast, being an algorithm developer myself, I sensed that the On2 guys were thinking really big in the video compression space. as always ,the standards body can innovate only so much, a good compan with sharp people do a lot more.
    2. Complete source control of the codec enables efficient security additions within the codec,google could solicit video syndication for big media channel partners,assuring secure delivery and amazing watermarking algos integrated into the codec.
    3. What I dont understand is that adobe flash is used to deliver 98% of internet video, but for mobile video Adobe is till nascent in the market. Google can parallel compete with adobe in a proprietary offering which could make Adobe suffer. Adobe themselves are contemplating open sourcing RTMP, now with google acquiring on2 , it will be interesting to see what they will do.

  • PCEHunter

    I wonder if the deal isn’t more about business in China. On2 has a very good presence in China. Google has been experiencing some resistance from the chinese gov’t and business.
    Maybe On2 is a good bargaining chip for Google in China. Anyone agree?

  • Christopher

    There is always a chance that Google is paying the large price out of kindness to the open source community. There’s no evidence to support this claim, but if any company would do such a thing, it would be Google.