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The latest Adobe Flash Player 10.2 beta (not Flash Player Square!) uses Stage Video, a new API that enables hardware accelerated video playback across platforms (currently only works with VDPAU - so for Nvidia with proprietary graphics drivers only):

Developers will be able to take advantage of this new model to deliver improved playback quality while reducing processor usage by up to 85 percent. This enhanced performance will build on the benefits of H.264 hardware accelerated decoding introduced in Flash Player 10.1.

Using it, the processor usage for 1080p YouTube videos dropped from ~90% to around 20-30% on my computer. It's not as good as say Mplayer with VDPAU, but it's definitely an improvement.

I've recorded a video in which you can see the CPU usage with and without Stage Video:

In my test, the latest Adobe Flash Player 10.2 beta with VDPAU hardware acceleration works well in Firefox but crashes a lot in Chromium (but that might be due to the Chromium version I'm using - 10 unstable from the Chromium daily builds PPA).

Use Adobe Flash with VDPAU Hardware Acceleration

Note: Adobe Flash Player 10.2 beta is not stable so you may experience crashes or it may not work at all for you. Use it at your own risk!

Video Acceleration (using Stage Video) for Adobe Flash Player 10.2 beta only works with VDPAU so you'll need an Nvidia graphics card; you'll also have to install the proprietary Nvidia graphics driver.

To use it on Ubuntu 32bit, all you have to do is download and install the latest Adobe Flash Player 10 beta 2 (download from here; to install Adobe Flash, extract the downloaded archive and copy the .so file to /usr/lib/flashplugin-installer/ if that folder exists or /usr/lib/adobe-flashplugin/ - it depends on how you've installed Adobe Flash) and install libvdpau1:
sudo apt-get install libvdpau1

Ubuntu 64bit: there is no 64bit Adobe Flash Player 10.2 beta so to get hardware acceleration on 64bit you must install the 32bit Flash as well as the 32bit libvdpau. For instructions on how to do this, see THIS post @ Ubuntuforums.

YouTube has beta support for Stage Video and it currently only works for some videos (here's an example). To check if you've correctly installed Flash 10 beta 2 and VDPAU, click the Big Buck Bunny image from the Adobe Labs Stage Video page.

Thanks to WebUpd8 reader Amano for the tip!