I have been suffering from this for months, possibly even years, and I still don't have the slightest clue about the cause.
Let's say I open a video on YouTube in Chrome, like Jamie Hyneman's Thoughts on Designing and Making with CAD, the player will instantly stop playback after the advertisment and start buffering. Once it has 10 seconds buffered, it will continue playing and stop again after having played the 10 seconds.
Googles own recommendation in cases like these is to pause the video and wait for it to fully buffer, but when I pause the video, it will never fully buffer. At best, it will load a couple seconds of video and then stop buffering altogether.
In contrast, when I open the same video in Firefox at the same time, not only will playback be perfectly fine, if I pause the video, it will fully buffer. Here is a comparison:
A couple more minutes later, and the video is fully buffered in Firefox while the situation in Chrome is unchanged.
In this situation, both browsers were using the Flash player (obviously, Chrome uses its built-in implementation).
What is the cause of this behavior and how can I fix it?