One of the big innovation sector these days is the connected TV market. It seems like every major tech company now has some type of solution that can power your living room set, with television makers going so far as to include entertainment software built into the TV itself.

Now, Cisco Systems (News - Alert) just made a huge, $5 billion deal, to enter the market by acquiring NDS (News - Alert) Group, and compete openly with Apple TV, Google TV and others. Through this deal, Cisco hopes to be the latest in this quickly growing industry, and have all the elements needed to create connected TVs as well.

NDS Group is a British company that makes software for cable and satellite providers. In fact, they have about 90 clients around the world, reaching up to 150 million customers through built-in entertainment centers and other software in modern TVs and cable boxes. NDS has a fully integrated system and creates the software for the user interface as well as the back end services.

It's likely that Cisco will integrate this new acquisition with its Videoscape system, which is a cloud based solution the company introduced last year to enable any partner to deliver video content on TVs, mobile phones, and more. John Chambers (News - Alert), Cisco's CEO, called the deal “one of the most strategic acquisitions we've done.”

It's still unclear how successful Cisco will be in this market. TV and cable box providers have a huge advantage in that viewers need their interface in order to watch traditional TV programming, yet many customers dislike the way their current cable system works, which is why things like Apple TV, Rokku and TiVo (News - Alert) became so popular, even if they are add-on solutions that have to go on top of the existing cable box.

Cisco hopes that by having a fully integrated solution, they will be able to do a good enough job to provide an experience people will like. They aren't the only ones in the field however, with almost every TV manufacturer starting to add deep online integration in their devices.

Cisco has been known to buy a lot of smaller companies in recent years, although it had quieted down recently after a corporate restructuring. The NDS deal is one of its largest so far, and includes debt and retention-based incentives. Cisco said it believes the company is worth the hefty price tag (News - Alert), and hopes to become a major player in the industry.