Someone from Adobe once told me the main reason holding back open sourcing the player was licensing. Apparently the player consists of quite a bit of licensed technology that Adobe obviously couldn't open up, and some of these are so core to the player that refactoring it wouldn't really be feasible or not really worth doing. Rewriting it to not use these technologies or use them in such a way that they could be plugged in with alternatives would be too expensive and for little apparent business gain.
I paraphrase of course and I can't really vouch for the veracity of these claims, but I'm hoping someone with first hand information might be able to corroborate or deny. Sounds plausible to me.
I worked at Adobe in those days and AFAIK this is correct. The Flash player includes a bunch of codecs (mp3, on2, nellymoser, sparc, and I think others), and I believe there's a variety of other licensed code but I don't remember the details.
I paraphrase of course and I can't really vouch for the veracity of these claims, but I'm hoping someone with first hand information might be able to corroborate or deny. Sounds plausible to me.