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To: Findit who wrote (99017)	11/19/2003 2:56:56 PM
From: Findit	Read Replies (1) \| Respond to of 208838

Anyone thinking of adding or getting into ONT? Seems like the market has short term memory loss on this one. This news from a few days ago is not being taken to heart. Check near the end where it indicates 90% margin on sales. Tuesday November 18, 8:40 am ET BEIJING -(Dow Jones)- China unveiled a new domestic video compression standard Tuesday designed to save Chinese companies millions of dollars in annual royalties paid to the patent holders of the current world standard. ADVERTISEMENT The new standard, Enhanced Versatile Disk, has been developed by local firm Beijing E-World using the VP5 and VP6 video compression technologies licensed by On2 Technologies , a small U.S.-based firm. EVD is expected to become the standard for the recording and playback of digital video, audio and data in the world's biggest market, the companies said in a release. MPEG2, or Moving Picture Experts Group 2, is a family of standards used for coding audio-visual information in a digitally compressed format. It is the current world standard for digital video disks. "Unlike the (MPEG2) technology used in China now, we charge no fees for disks, " On2 Chief Executive Douglas McIntyre told Dow Jones Newswires on the sidelines of a launch ceremony for EVD. "Chinese market players get huge savings (on royalty payments)." Under the contract with E-World, On2 received $1 million for the use of the VP5 and VP6 codes, and will get $2 for each EVD player manufactured, McIntyre said. That compares with patent fees of at least $13.80 for each DVD player made by domestic companies, state media have reported. Companies that own patents on the DVD technology include Japan's Sony Corp. (NYSE:SNE - News) . E-World will be the sole reseller of On2's technology in mainland China, Hong Kong, Macau and Taiwan under the deal. "Also, if EVD should become a success here (China), they can have the right without coming to us to export to anywhere else in the world," McIntyre said. On2's compression technology enables high-definition movies to fit on a single EVD disk, which isn't possible using current DVD encoding standards. McIntyre doesn't expect the deal to have much impact on On2's revenue this year, which he expects at $5 million. Around 10% to 20% of that will come from the E-World deal, he said. However, it could contribute as much as half of On2's 2004 revenue - which could rise to $15 million if E-World hits its production target, McIntyre said. E-World has said it will produce at least 800,000 EVD players next year, and double that number in 2005. As there isn't much cost involved in a license agreement like this, McIntyre expects as much as 90% of revenue from the deal to translate into profits for the company. -With Victoria Ruan, Dow Jones Newswires; (8610) 6588-5848; djnews.beijing@dowjones.com