Not for sure how they did it, but it kind of looks like they did a variant of the whole "data-moshing" thing seen in the Chairlift and Kanye music videos - they messed with video compressions, deleted keyframes, etc - then used the "errors" as an effect. At least that's what it looks like to me - compression "errors".
Thanks Simon, for the reply.
I had a look round the net, and did some tests and it seems to be several layers of footage with different datamoshed compression errors applied over the original footage.
avoiding any major cuts and jumps in the footage.
its probably masked as well to clean up any stray errors.