On2 Technologies and XM Satellite Radio Unveil Collaboration for Satellite Video Delivery at CES

In-Vehicle Systems to Feature On2 Video Technology

NEW YORK and LAS VEGAS, Jan. 3 -- On2 Technologies, Inc. (AMEX:ONT) announced today that advanced concept satellite video receivers, resulting from its partnership with XM Satellite Radio, are being shown at the 2006 Consumer Electronics Show (CES) this week in Las Vegas. The in-vehicle satellite video receivers are being demonstrated at the XM Radio booth #4606 during the show, as well as in the On2 Technologies demo suite at the MGM Grand.

The advanced concept video receivers are designed to receive audio and video entertainment from XM's signature satellite content delivery services. Video content can be either streamed live or stored on the in-vehicle receivers for later playback. These solutions leverage groundbreaking On2 VP7 technology to ensure the best quality video at low data rates.

Visitors to the XM Satellite Radio booth or the On2 MGM Grand Technology Demo Suite will experience first-hand how the On2 VP7 compression technology enables high quality personal satellite video delivery.

"On2's VP7 video compression is enabling XM Satellite Radio to develop solutions for extending our entertainment offerings in the vehicle," said Dr. Stell Patsiokas, executive vice president, technology and engineering at XM Satellite Radio. "We see an exciting future for these capabilities and look forward to continuing our successful partnership with On2."

"XM Satellite is one of the early innovators to understand how technology impacts the everyday consumer, and how to leverage technology to create new entertainment experiences for their audiences," added Douglas A. McIntyre, On2's chairman, president and chief executive officer. "This week they're taking their innovations to new heights, and we're proud that On2 VP7 technology is playing such a prominent role in creating these new entertainment distribution models."

About On2 Technologies, Inc., The Duck Corporation

On2 Technologies (AMEX:ONT) is a leading technology firm at the forefront of digital video compression. The company revolutionized digital media delivery with the creation of its advanced full-motion, full-screen On2 Video compression and streaming technologies. On2 Video codecs are widely used in the Internet, video-on-demand, VOIP, and mobile media markets. They operate with On2's Flix and On2 TrueCast software, as well as third-party products. On2's software is used by such leading global companies as Adobe/Macromedia, AOL, Skype, XM Satellite Radio, Sony, VitalStream, and Tencent. The On2 Video decoder has an installation base of millions through its inclusion in Adobe Flash Player, Skype 2, AOL Media Player, Viewpoint, and others. Located in New York City, the company has an office in Clifton Park, NY, and operations in Cambridge, UK. To contact On2, write to sales@on2.com or visit www.on2.com.

About XM Satellite Radio

XM is America's number one satellite radio service with more than 5 million subscribers. Broadcasting live daily from studios in Washington, DC, New York City and Nashville at the Country Music Hall of Fame, XM offers 160 digital channels of choice from coast to coast: the most commercial-free music channels, plus premier sports, talk, comedy, children's and entertainment programming; and the most advanced traffic and weather information.

XM, the leader in satellite-delivered entertainment and data services for the automobile market through partnerships with General Motors, Honda, Toyota, Hyundai, Nissan and Volkswagen/Audi, is available in more than 130 different vehicle models for 2006. XM's industry-leading products are available at consumer electronics retailers nationwide. For more information about XM hardware, programming and partnerships, please visit http://www.xmradio.com/.

Trademarks mentioned in this release are property of their respective owners.