Here is a summary of the workaround mentioned before the bug was fixed:

1) Open a terminal window (Applications > Accessories > Terminal)
2) Enable the Multimedia Systems Selector menu option:
a) Go to System > Preferences > Main Menu
b) Under "Menus:" scroll down to and click "Preferences". The right part under 
"Items;" will update itself
c) Mark the "Multimedia System Selector" checkbox, click "Close"
3) Go to System > Preferences >Multimedia System Selector"
4) Under the "Video" tab change the Default output plugin to "X Window System 
(no XV)"
5) Click "Test", you should see a window popup with a series of vertical color 
bars, much as older classic TV color tests
6) Click "OK" to finish the test, now mpeg playback should work.

-- 
totem crashes with 'BadAlloc (insufficient resources for operation)' when using 
compiz and xserver-xorg-video-intel driver
https://bugs.launchpad.net/bugs/111257
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