This article in the Washington Post reports that On2 is being purchased by Google for $106 million in stock.

On2 has a really excellent video codec with some advantages over industry standards from Microsoft and the MPEG. But the relatively small price for a well-established and sporadically profitable company points out the difficulty faced when trying to sell video compression not backed by industry standards groups.

One often used metric on a buyout is the cash value per employee. In this case, it’s roughly $1.75M for each On2 employee. Just to contrast, earlier this year my employer, Cisco Systems Inc., acquired Pure Digital, makers of the Flip video recorder. In that case, the payout per employee was roughly $5.8M per head.

Probably not apples-to-apples, but something to think about.