If the problem still occurs, try the suggestion by @DirtyDroidX
Delete YouTube from /system/app and reboot. Then download it from the market. http://forum.xda-developers.com/show...0&postcount=53
I'm not sure if you guys have noticed but with the XNPH30O OTA it updated our phones from Android 4.4.2 to 4.4.4. Thats great and all, but theres something that a lot of us didn't see happen. When we updated to Android 4.4.4, we also lost our ability to watch YouTube videos on 1080p.
By using Android 4.4.4, the YouTube app only grants us the option of viewing YouTube videos at a maximium of 720p even though the video is capable of transcoding to 1080p. This is not exclusive to the OnePlus One but also to other devices such as the HTC One M8, Nexus 5 and so forth (originally saw this thread on the N5 forums but not everybody here visits that forum because they might not own the device so this is more or less a repost to be informative)
You can verify this by selecting any YouTube video of your choice, go to menu -> gears (middle) -> max 720p.
By doing the below the max will be 1080p.
* Root Access
* Ability to edit build.prop in /system/ of your choice whether it is pushing it, file explorer, etc.
1. Open build.prop in /system/
2. Find the line
5. Go to any YouTube video and then go to menu -> gears -> 1080p should be shown.
How to Revert
When a new OTA comes, you will need to manually open up build.prop and modify the line from 4.4.2 back to 4.4.4 and then apply the OTA.
Enjoy your YouTube videos in 1080p rather than 720p! Hopefully YouTube fixes this but for now this is the workaround.