Google is in the buying mood again it seems as they recently gobbled up ON2 Technologies who create high-quality video compression technology. What’s that mean for the video web? One can never be certain, can one? But we’ll tell you what WE think.On2’s technology powers client online and desktop apps including Adobe, Skype, Nokia, Infineon, Sun Microsystems, Mediatek, Sony, Brightcove, and Move Networks. That’s a pretty big list of heavy hitters. Google has agreeds to purchase On2 for about $106.5 million, not too shabby to say the least. Each share of On2 common stock will be converted into $0.60 worth of Google Class A common stock in the transaction. That’s about 57% over the closing price of the stock that day. Of course, the regulatory folks have their noses in it and have to vet the whole deal.

Google knows that video is going to continue to become the dominant form of web experience and have now positioned themselves to help drive innovation in that sector by the acquisition. With the video compression technology from On2 they will help improve online video quality which is a good thing for all involved on both sides of the video player (that’s us and the viewers).

On2 Technologies was certainly doing fine in their own right already counting major names in multiple sectors as major clients, but with the power of Google’s brand and bankroll behind them there’s no telling what they’ll be able to achieve now. Video compression is starting to be a highly prized commodity on the web as full HD becomes the norm it also requires some massive bandwidth. Better video compression is going to be faster downloading and streaming and higher quality. That could eventually make full 1080p HD a distinct possibility for steaming in the future.

The problem with 1080p being streamed is simply that most people haven’t got sufficient bandwidth to allow for it to stream without stuttering, repeatedly buffering or generally looking poorly. If a compression algorithm can be designed that can crush the data better without degradation of the video quality, this could eventually lead to every video platform and sharing site on the planet being able to shift 1080p video via a stream. That’s still going to be a massive amount of power and bandwidth but is completely viable. 1080p video needs approximately 9 Mbps to stream fluidly. Most people don’t have a steady broadband connection that can support that much bandwidth dedicated to one stream. If they do it would pretty much max out their connection and since nothing in the world is 100% it’s unlikely that even with a 10Mpbs broadband connection, you probably won’t get a steady 9Mpbs.