ceocfointerviews.com – All rights reserved. – Issue: October 12, 2007

”Any Video, Anywhere’ - With people demanding video on their PCs, TVs and mobile phones, provides the solutions to deliver any video to any device over any network

sion and streaming technologies. On2 looking for in my career, the opportunity video are widely used in the Inter- to take a promising company to the next net, gaming, VoIP, and mobile media level.” markets. On2's software is used by such leading global companies as CEOCFO: What is the current vision for Adobe/, AOL, , XM the company and how do you get there? Satellite Radio, Sony, CTTnet, Vital- Mr. Joll: “Our vision for On2 Technolo- Stream, and Tencent. Located in New gies is formed around the mantra of ‘any York City, the company has R&D offices video, anywhere’. This is something we in Clifton Park, NY, and Cambridge, UK. have been doing for some time, but now it Services is a mainstream industry trend. What this Business Services represents is that we enable any video to (ONT-AMEX) Interview conducted by: be delivered anywhere, meaning to any Lynn Fosse, Senior Editor On2 Technologies, Inc. CEOCFOinterviews.com device, for any application, over any net- work. What is happening with video to- 21 Corporate Drive, Suite 103 CEOCFO: Mr. Joll, you are fairly new in day is that consumers want to view video Clifton Park, NY 12065 the role of CEO, what attracted you to on their PC, TV, mobile phones, and Phone: 518-348-0099 On2 Technologies? portable devices --basically any device. Mr. Joll: “On2 is uniquely positioned in New and established media companies the video industry. We are known to pro- are launching services to offer download vide the best quality video for any appli- and streaming services, but also tradi- cation. We have been the vanguard in tional broadcasters are embracing new pushing the envelope in this aspect, and mediums to reach a wider spectrum of we are the video in many pioneering users. We call this convergence or cross products and services from well-known platform applications, but the reality is brands, as a result. A few that come to that there is a sea change underway in the mind are companies like Skype, Adobe video industry. We have been involved in (Flash® video), AOL, Sony, and so on. such cross platform video since early days We have approximately 1.2 billion de- of the company, by applying our tech- ployments of On2’s video technologies. nologies for multiple applications, device Yet we are still a small company, and and delivery platforms. It is therefore in given the revolution that is happening in our DNA, in a manner of speaking, to bring solutions and innovations to this video -- that is video is moving from the transformation that is going on in the Bill Joll living room now to practically any device industry. We provide everything from President and CEO and can be consumed anywhere – the growth prospects before On2 are compel- core video compression technology to

ling. Moreover, On2’s position in the tools, and system solutions, and are build- Company Profile: industry is an advantage – we are well ing our company’s operations around this On2 Technologies (Amex: ONT) is a known and respected for our technology capability to deliver any video, anywhere leading provider of video compression prowess and a fifteen-year history of suc- – in the most efficient, easy and afford- software and solutions. The company cess in this regard. So, when I look at able way for our customers.” revolutionized digital media delivery with where we are and where we can take this the creation of its advanced full-motion, company, it is perfect for what I was full-screen TrueMotion® video compres- CEOCFO: What are you actually provid- evolved solution level, we have a com- companies that are serious about video ing for people? plete end-to-end system for mobile video, know us. As we have broadened our solu- Mr. Joll: “At the core, we develop video called our TrueMobile® solution, that is tions for consumers and web media com- compression technologies, and the prod- the most efficient mobile video system panies, a lot of our customers find us uct is called a . Codec stands for presently available and it is currently in through word of mouth, including compression and decompression. So, in trials by China Mobile in ten provinces. through various influencers on the web. essence our technology allows video to be As part of this solution, we have a player We also have a growing sales force and compressed to a much smaller size by the that is deployed on mobile devices, and channel partners that conduct business developer of the video, and then decom- going forward we have playback and de- development and sales for us. Today we pressed at the user’s end while playing coding technologies that are being im- are also more proactive with advertising back video with a higher qual- plemented in chipsets by major semicon- and public relations than we have histori- ity than a non compressed file “Our vision for On2 Technologies is formed cally been.” for a given bandwidth. Codecs are the engines that power around the mantra of ‘any video, anywhere’. CEOCFO: Is it proprietary video, as we know it today. This is something we have been doing for some technology, is it a better way of What primarily sets codecs time, but now it is a mainstream industry trend. using the technology; what sets apart from one another is their What this represents is that we enable any video you apart from the competi- ability to maintain the quality to be delivered anywhere, meaning to any de- tion? of the video as bandwidth de- vice, for any application, over any network. Mr. Joll: “We became the de creases. Factors such as com- facto standard when Adobe plexity, which affects power What is happening with video today is that con- (formerly Macromedia) chose consumption and processor sumers want to view video on their PC, TV, mo- our technology for , requirements, are also key dif- bile phones, and portable devices --basically any the Adobe® Flash® Player 8. ferentiators. Our TrueMotion device. New and established media companies We provide higher quality, codecs are regarded as the best are launching services to offer download and better licensing terms, and we in the world, and these have use less bandwidth, so that is about 1.2 billion deployments streaming services, but also traditional broad- what sets us apart. Now what is with high-profile customers casters are embracing new mediums to reach a happening in the industry is the such as Adobe, Skype, AOL, wider spectrum of users. We call this conver- standards based technologies and Viewpoint. While we gence or cross platform applications, but the re- have established themselves in maintain our commitment to ality is that there is a sea change underway in certain markets, such as video- our best-of-breed codecs, with the video industry. We have been involved in on-demand. And while we con- our pending acquisition of tinue to aggressively market Hantro Products located in such cross platform video since early days of the our proprietary technology and Finland, we will add the ability company, by applying our technologies for mul- help introduce new service to support leading standards tiple applications, device and delivery platforms. paradigms, such as what we based codecs for our solutions It is therefore in our DNA, in a manner of have done with Skype, with the that are built on codecs. These speaking, to bring solutions and innovations to the pending Hantro acquisition solutions are a range of soft- we will support customers for ware products that fulfill the this transformation that is going on in the indus- standards based technologies to ‘any video, anywhere’ promise. try. We provide everything from core video the extent that we provide We also market our Flix® compression technology to tools, and system so- value to the industry and derive brand of encoding and publish- lutions, and are building our company’s opera- synergies with our existing ing tools, which allow our cus- tions around this capability to deliver any video, products and technologies. tomers to create and publish anywhere – in the most efficient, easy and af- Therefore, we have a combina- videos for web, mobile devices, tion of proprietary technologies and other applications. Suffice fordable way for our customers.” - Bill Joll ideally suited for the it to say, we offer the broadest and mobile applications, and line of products that allow practically any ductor houses so that consumer grade the standards based technologies that are video file to be purposed or repurposed devices like set-top boxes and DVD play- used by some in the broadcasting indus- for any desired application. We have ers will be able to play video in high try. With the pending acquisition of Han- these products for consumers, profes- quality.” tro, we are further expanding our pres- sional users, enterprises, and service pro- ence in the standards and device space.” viders, with a varying range of features CEOCFO: How do you reach your cus- and capabilities for different markets. We tomers? CEOCFO: Are acquisitions part of your also provide these for desktops and server Mr. Joll: “As I mentioned earlier, we strategies going forward? side encoding, and across Windows, have been established as a leader in video Mr. Joll: “The industry is moving fast and Mac platforms. At a more codecs for more than fifteen years, and and there are many diverse elements con- verging. These elements are what I al- quality in bandwidth-constrained envi- look at the mobile set, a billion hand luded to earlier, essentially different ronments, and that is a market that needs phones are shipped every year. By 2010, technologies and applications that need to our technologies. We are exploring what 70% of those are going to be video en- work together for a complete consumer we do in South America and we already abled and we as a company are well posi- solution. Acquisitions are a logical way have a good presence in Europe. With the tioned to address that market.” for us to create synergies and stay ahead pending acquisition of Hantro, they also of the curve and grow. Both as a growth have an international sales force which CEOCFO: What do you see as the chal- strategy and competitive strategy, we look will further extend our reach into interna- lenges in accomplishing your goals and at where acquisitions make sense.” tional markets.” how are you ready? Mr. Joll: “Challenges are inherent when CEOCFO: Is it time for the industry to CEOCFO: Is your management team in opportunities abound in an industry such consolidate? place? as this. The challenges in the industry Mr. Joll: “In a sense, while video has Mr. Joll: “We have added and defined itself are that there are new service and been around for a long time, this is a new management roles over the last year that business paradigms being tested. Some industry. Just gauging by the venture are more in line with our business. We will prevail; some will fall by the way- capital investments, number of startups are growing fast in a fast moving indus- side. It is too early to tell. The fortunes of and the innovations in service paradigms try, and we are constantly adapting to some of our customers will also rise and and business models, this is the start of a make sure we are firing on all pistons. wane accordingly. There is also resur- new industry. I am referring to our cus- With the pending acquisition of Hantro, gence in format wars if you have been tomers and potential customers who are we will have a bigger team and broader following the developments by some of media companies and service providers. scope for the management team.” the major companies. This development Consolidation is a natural progression. In has certainly been fueled to some extent CEOCFO: Please tell us a bit about Flix some ways, it has started when you look by the success of Adobe’s VP6-based Publisher. at ’s acquisition of You Tube, and Flash video. It is easy for us to remain Mr. Joll: “I am glad you ask, because Comcast’s acquisition of the Platform. proprietary with our TrueMotion video as Flix Publisher is one of those amazing, That said, I consider the industry to still we have done in the past, but we also innovative products that meets the needs be in a nascent stage with more compa- have to recognize many of our customers of the time. Flix Publisher allows anyone nies entering the market than leaving need to support multiple formats. In some to become a video producer and publisher through acquisition, consolidation or oth- cases, such as mobile video, the market is without any prior knowledge of video erwise.” still in a very early stage even though publishing and without any infrastructure technologies are ready. It takes patience or capital costs. It is provided by service and persistence to stay the course, be- CEOCFO: What is the financial picture provider as a web page to a user, where cause these are huge investments and like for On2 today? the user can drag and drop a video file commitments our customers are making, Mr. Joll: “Positive. We are experiencing that, say, they shot with their camcorder. and we need to understand that. As we double-digit revenue growth. Our cash Instantly, the file is transcoded right on move up the value chain in terms of pro- reserves have been growing. We are op- the user’s desktop in accordance with the viding either embedded solutions or sys- timistic going forward because the market parameters that the service provider has tem solutions, we are also going to find opportunity is certainly there, and we are predefined, and uploaded to the service bigger companies also in the running. We positioned even better.” provider and published instantly. It fits are approaching such opportunities so perfectly with how the user generated that we don’t rule out strategically part- CEOCFO: You mentioned using dis- content sites and social networking sites nering with others.” tributors in various places; in what parts run their services, but without all the of the world are you looking to do that capital costs and operational complexi- CEOCFO: What should people take and what is the growth strategy interna- ties, they have today. The same holds true away from this interview? tionally? for live video with Flix Publisher Live.” Mr. Joll: “We are at the heart of the Mr. Joll: “Internationally there are mar- video revolution. We are the company kets that are either very aggressive, such CEOCFO: Why should investors be in- poised to deliver any video anywhere. as Korea and Japan, and those where the terested and what might they miss about Our presence in the market is larger than opportunities are untapped, such as India On2? our size would indicate through our rela- and China. We put an agent in Taiwan, Mr. Joll: “We are poised at the cusp of tionships with marquis customers like an agent in India; we have distributors tremendous growth in the video industry. Adobe, AOL and so forth. We are con- and resellers in Korea and Japan. Japan In terms of our strategy, we’re aiming at nected with the Who’s Who of players in and Korea are the leaders in terms of the largest addressable market; cameras, the industry to make the emerging world video service deployments. India is a cell phones, PDAs, connected over of video a reality.” growth opportunity because there is tre- broadband, 2.5 and 3G, Wi-Fi, WiMax. mendous demand and the infrastructure We are focused on getting our technology is inadequate. We address the issue of into the vast array of such devices. If you

On2 Technologies, Inc.

21 Corporate Drive, Suite 103

Clifton Park, NY 12065

Phone: 518-348-0099