The following video will show how this works. Download and installation instructions can be Found Here
What is PSP Tube?
All who are YouTube junkies will love PSP tube (No. its not related to anything that has to do with Photoshop, Ha). It is a homebrew application for the PSP that lets you watch and save YouTube videos on the PSP. This is done via Wi-Fi, and it is excellent, because there is no need to convert video files. It is easy to use too, you just run the application, connect to your Wi-Fi network, search, and enjoy watching! It is that simple. I recently installed this on my PSP, and recommend it very much.
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