On2, Intel in Codec Deal

New York-based video compression company On2 Technologies has struck a deal with Intel to optimize its flagship codecs for use with the chip giant’s Pentium 4 microprocessor.

On2, which markets the VP5 and VP6 codecs that offer high-quality video resolution at heavily reduced data rates, said it would provide Intel with its codec and player code base for evaluation and optimization with Intel’s processor-based systems and chipsets.

The deal opens a potentially lucrative market for the distribution of On2’s technology into Intel products, a point emphasized by On2 chief executive Doug McIntyre. “We are certainly excited about this opportunity given the huge array of products at Intel and the benefit that their platforms bring to the enhancement and distribution of our codec and player code,” McIntyre said.

Financial terms of the deal were not released.

The Intel pact comes on the heels of a slew of licensing deals between On2 and big-name technology firms, including America Online , Sony Corp. and the Beijing E-World Technology Co.

In April, On2 signed a licensing deal with AOL to put its flagship VP5 and VP6 codecs on services offered by AOL’s content partners.

Earlier this week, On2 also licensed its VP5 codec software to STARK Co. Ltd., a Japanese video-on-demand service firm. STARK plans to use the VP5 codec to shuttle high-quality pictures at low bit rates to its VOD customers.

The Beijing E-World Technology pact, which covers a consortium of China’s consumer electronics firms, also included an equity financing deal valued at just under $2 million.

In addition to the financing, On2’s VP5 and VP6 codecs will be used in Beijing E-World’s Enhanced Versatile Disk (EVD), a next-generation player that will power the recoding and playback of video, audio and data.

The Beijing E-World transaction also provides for VP5 or VP6 to be used as the video compression/decompression technology in a HDTV system being developed as a standard for China by E-world and others.

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