High Definition Video to Internet Computers, Cell Phones and Handhelds Aim of New Agreement Between Broadcast International and On2 Technologies

LAS VEGAS — Broadcast International (OTCBB:BCST) (“BI”) and On2 Technologies (AMEX:ONT), leaders in video compression technology and solutions, today announced an agreement to make real-time, high quality video, including high-definition (HD) video, accessible anywhere to capable network-connected devices.

Under the agreement, Broadcast International will integrate On2’s market-leading TrueMotion® codecs, which have more than 1 billion deployments worldwide, with its breakthrough CodecSys multi-codec video compression software. This integration will allow content available in standard formats to be encoded in real-time for delivery to a broad range of devices in resolutions significantly higher than previously possible.

“By incorporating the On2 Technologies codec into Broadcast International’s CodecSys encoder framework, this opens up the world of Adobe® Flash® video and points to the future possibility of massively powerful and yet cheap encoders, running on the IBM Cell chip, which can ingest video once, and real time encode at impossibly low bandwidth, video for set tops, PCs and handsets, all in a single pass,” said Peter White, Principal Analyst for digital media at Rethink Research Associates.

As a result, any high quality content can be repurposed for IP delivery to a wider consumer base in the burgeoning IP video market. Consumers will be able to receive very efficient full screen, full motion video, including HD video delivery to their computers, laptops, cell phones, and other video devices in On2’s TrueMotion® VP6™ and VP7™ formats. On2’s TrueMotion formats are used by a vast number of web video, social networking and user generated content sites, and leading web video conferencing and instant messaging services.

“The days of small-screen, jerky, fuzzy video over the Internet are numbered,” said Rod Tiede, CEO of Broadcast International. “Our agreement with On2 will make watching video on your computer the same quality experience as on your home theater system. And if you’re not at a computer, you can watch it on your cell phone. It’s a real breakthrough for consumers, everywhere.”

The CodecSys software will be powered by IBM’s Cell Broadband Engine™ (Cell/B.E.) processor and the IBM BladeCenter® QS21 server, which incorporates the same powerful, multi-core IBM processor used in the Sony Playstation 3®. The video encoder will enable HD quality video to be encoded and delivered within bandwidths previously supporting considerably lower-quality video, resulting in high quality video being made available to a broader market. Simultaneously, On2 has announced video initiatives with a new VP6-S™ profile of its popular VP6 codec for HD video at extremely low bandwidths and low processor power requirements, and updates to VP7 similarly capable of HD video at very low bandwidths.

“On2 is in the ‘cat bird seat’ to help the world move TV content onto the web, move the web to TV, and move everything to mobile devices, and it’s all got to support high definition,” said Gerry Kaufhold, principal analyst with In-Stat. “Broadcast International’s high-performance CodecSys platform provides digital delivery services with a future-proof solution for all of their encoding needs, and will help increase the availability of HDTV on demand.”

CodeSys will enable content providers and distributors to use a single encoder to deliver video to any device, no matter how it’s transmitted – over broadcast, cable, Internet, or mobile networks. Traditional encoding solutions require single-purpose encoders for each type of transmission, increasing the cost and operational complexity required to maintain ubiquitous support for multiple codecs and delivery networks. By supporting On2’s video codecs, CodecSys will allow any video to be sent to any device that supports On2’s codecs, which includes Adobe® Flash® Player available on more than 90 percent of PCs worldwide, and will be available on Adobe® Flash® Lite™ 3 (FL3) devices in 2008.

“The combination of On2 TrueMotion and CodecSys solve the problem of quality and accessibility in one elegant solution,” said Bill Joll, president and CEO of On2 Technologies. “With On2’s more than 1 billion deployments and CodecSys’ functionality that allows high quality content to be easily repurposed for any delivery mode, content and service providers will have an easy and affordable way to reach the widest possible audience for IP delivered HD video, whether that be over wired or wireless networks.”

BI and On2 executives will be at CES 2008, January 7-10 in Las Vegas, for briefings regarding this announcement at the IBM booth (South Hall #36634) and On2 booth (LVCC booth # 11808), and at the Pepcom event on January 6, 2008.

Video “Placeshifting” Has Arrived

The powerful combination of BI’s CodecSys software running on IBM’s Cell/BE engine — coupled with On2 Technologies’ ubiquitous presence on virtually every computer and device – will enable a trend called “placeshifting.” Placeshifting is the ability to watch video content anywhere from any video capable device including computers, cell phones and PDAs.

“Applications such as placeshifting, and mobile social networking are shaping the future of video, said Rod Tiede, president and CEO of Broadcast International. “The problem has been available bandwidth, on the one hand, and the inability to deliver content across multiple delivery networks to an end-user. Now, both of those problems are solved. And end-users who want to watch their favorite video content from wherever they happen to be will be the big beneficiaries.”

Patented CodecSys technology, now with On2 codecs

Broadcast International has patented the unique CodecSys approach of using multiple expert codecs rather than single, general-purpose codecs. By automatically switching between specialized codecs, choosing the best one for a particular frame or video sequence, CodecSys is able to reduce video bandwidth requirements more than 80% for HD video over all types of delivery platforms including broadcast, cable, IPTV, wireless and the Internet.

The On2 Technologies’ codecs will be added to the CodecSys codec line-up, enabling a wider range of video to be delivered to consumers on the platforms that users have already chosen, including 90% of desktop computers worldwide. The IBM Cell/B.E. processor accelerates the CodecSys codec-switching process, providing a platform for nearly unlimited processing power and video compression capabilities.

BI’s software is based on an open software architecture that can accommodate new standards, such as H.264, as well as new specialized codecs as they come onto the market. The IBM Cell/B.E. processor hardware platform is also highly programmable and scalable, enabling customers to add additional processing power by simply adding extra processors or “blades”.