Updates for both PowerPoint 2010 and PowerPoint 2013, were released on Tuesday (4/8) that reintroduces support for YouTube videos into PowerPoint. The feature goes live on April 15. You need to install the updates listed for your PowerPoint version to be ready.
PowerPoint 2010 and 2013 for Windows originally included support for embedding YouTube videos that were in an old format that YouTube no longer supports. As this old format started disappearing from the YouTube service, the support for YouTube videos in PowerPoint started faltering. These changes led us to disable support for inserting online videos from the product because we could not reliably support playing back YouTube videos.
What the update brings
Since the time playback of online videos was disabled in PowerPoint, the PowerPoint team has been hard at work to re-enable support for YouTube in a way that is resilient to changes and more robust. For PowerPoint 2013 we now use a browser to host these videos, which provides us the resiliency. This not only means that we can support HTML5 videos but also that we will be able to playback YouTube videos as long as they can playback in any browser. Both PowerPoint 2010 and 2013 for Windows are updated to include support for YouTube videos in the newer HTML5 and Shockwave Flash ActionScript 3.0 formats.
Note: The insert online video option is limited to YouTube support for both PowerPoint 2010 and 2013.
Online Help Topics (available by 4/15)
Insert or link to a video on YouTube
Link to a video on YouTube from PowerPoint 2010