With the Internet search giant Google Inc announcing on Wednesday that it intends acquiring high-quality video compression technology provider On2 Technologies, it is quite evident that Google is looking at strengthening its foothold in the Web video arena!

The proposed $106.5 million all-stock with On2 Technologies will enable Google access to the singular technology that can help compress video files for their easy mailing across the Web, thereby reducing the costs for YouTube - Google's popular video-sharing site.

The compression of video files will essentially be significant for YouTube, given the fact that with its users uploading nearly 20 hours of footage a minute, shrinking of files would mean less bandwidth to be bought by YouTube from Internet access providers.

On2 boasts of having installed over 2 billion units of its On2 Video VPx codecs - comprising On2 VP6 for Adobe Flash Player and JavaFX,; On2 VP7; and On2 VP8. The customer-list of the company includes Adobe, AOL, Nokia, Sony, Skype, XM Satellite Radio, Analog Devices, Yamaha, LSI Logic, TI, Cox, VideoEgg, and Brightcove.

Commenting on the deal with On2 - which would likely close in the fourth quarter - Google Engineering Director Jeremy Doig said: "Because we spend a lot of time working to make the overall web experience better for users, we think that video compression technology should be a part of the web platform."