This points to a decoder error in that player. Since it's rare for the companies to issue firmware to fix this today you return it as defective and try another player.
I recently purchased a Panasonic blu ray DMP-BD903. I have been playing DVD's that all belong to the same box set. For each disc, one out of the four episodes has a scene or two with pixelation. It does not matter how long the disc is playing, each time I get to the scenes in question the pixelation is there. I have tried the disc in two DVD players and the pixelation did not show. I also tried the discs in a Sony blu player, no pixelation. I have since tried two other DVDs in my blu ray player and they play fine. Can any one help with why the pixelation occurs in my player on the disc only???