MUMBAI: On2 Technologies, which specialises in video compression, has announced that Tencent Holdings has licensed its video compression technology.

Tencent is looking to enable a new wave of video-enhanced PC instant messaging (IM), online gaming and online entertainment applications for its hundreds of millions of customers throughout China. Tencent provides internet and IM-related value-added services in the region.

On2's non-exclusive licensing agreement with Tencent is the latest in a series of initiatives by a growing number of instant messaging, online gaming and video-enabled content developers around the world, signalling a rapidly-emerging market opportunity to create and deliver video-enhanced, value-added internet content and communications services.

On2 Technologies president and CEO Douglas McIntyre says, "Tencent is the premiere instant messaging and digital media content provider in China and, as a result of this partnership, is on the threshold of delivering a breadth of new video-enabled PC applications to over a hundred million consumers throughout the region."

Tencent senior executive VP international business David A.M. Wallerstein says, "As the majority of our users upgrade to broadband services, we understand that an increasing range of online services are going to require high quality video. We look forward to partnering with On2 as a leading provider of video compression technology solutions".