TARRYTOWN, NY (November 12, 2007) - On2 Technologies (AMEX:ONT), a leader in video compression solutions, announced today that a new version of its TrueMotion VP7 video compression is used in Skype™ 3.6 for Windows to help deliver High Quality Video calling to Skype users.

The beta version of Skype 3.6 for Windows can be downloaded from skype.com/intl/en/download/skype/windows/beta. The VP7 update helps Skype users experience sharper and smoother  video calls in a bigger call window.  The updated video technology needs significantly lower bandwidth and processing power than is normally required for comparable video quality.

“Skype has already helped fuel the incredible popularity of free video calls over the Internet,” said Jonathan Christensen, Skype’s general manager for audio and video. “The new VP7 update, along with extensive optimization work by engineering teams at Skype and Logitech, has moved the bar even higher. It has done so within processor and bandwidth constraints that make this quality available to a broad group of people.”

Skype has used On2’s award-winning VP7 video compression since 2005.  VP7 technology is designed to provide superb video at very low data rates and perform efficiently on low-power processors.  The new VP7 update is specifically designed for video conferencing, using optimizations targeted at stable camera video and processor scalability.

“In conjunction with Skype and partner Logitech, we have been able to optimize VP7 to achieve video-quality improvements while maintaining tremendous bandwidth efficiency,” said Bill Joll, president and CEO of On2 Technologies. “These are remarkable results for video conferencing. Users will find that they can get lifelike High Quality Video at 384 kbps, a fraction of the bandwidth of most broadband connections.”

Skype, an eBay (NASDAQ: EBAY) company, has 246 million users, and about 25 percent of all Skype-to-Skype calls involve at least one video participant.

About On2 Technologies, Inc.

On2 Technologies (Amex: ONT) ensures a compelling video experience for any video application anywhere. From low bit rate to high definition (HD), On2 provides optimized video compression technology enabling innovative solutions for application developers, content and service providers, chip vendors, device manufacturers, digital signage companies and beyond.

Through continual innovation, On2 satisfies the toughest quality, bandwidth, and power requirements for video. The company's proprietary (TrueMotion® VP6™, VP7™) and standards based (MPEG-2, MPEG-4, H.263, H.264, VC-1) codecs dominate the video market, with more than 1 billion deployments on desktops worldwide and more than 200+ million in mobile; they are also proven in silicon with over 25 semiconductor manufacturers globally.

Established in 1992 and headquartered in Tarrytown, New York, On2 has offices and partners in Finland, Germany, UK, Japan, China, Taiwan and Korea. Customers include Nokia, Samsung, Sony, Freescale, AMS, Atmel, Adobe/Macromedia, AOL, Sony, Skype, Facebook, VideoEgg, Brightcove, Move Networks and XM Satellite Radio. For more information please visit www.on2.com.