The quality of YouTube videos on your Sony PlayStation 3 depend on a few specific settings. Even videos labeled as "high definition" by YouTube could appear block-filled and pixellated when played back on Sony's console. If you want to fix the quality of YouTube videos on your PlayStation 3 you can do so by adjusting a few of the system's settings.
Access YouTube via the dedicated icon in the Internet browser and not via the browser's address bar. Type "www.youtube.com" into the address bar of the PlayStation 3 to navigate to the main YouTube website.
Allow videos to buffer before loading them. Select the name of a video on the YouTube site and immediately select "Pause." Allow the red indicator bar at the bottom of the screen to completely fill with color to indicate that your PlayStation 3 has retrieved all of the video. Select "Play" to view a higher-quality version of the video than you would see if you hadn't allowed it to buffer.
Use the PS3YouTube.com website instead of the actual YouTube website when accessing via the address bar on your Web browser. PS3YouTube.com is a third-party website that adjusts the formatting of the main YouTube page and the videos themselves to take advantage of the PlayStation 3 console.