Bummer. Poor design. There's a very limited audience for this. No kid over 3 will want to use this app. Kids know when they're not using the big kid version of something. They should've aimed more at appealing to older kids and pre-teens.
If they ever do decide to fix it, they should also make this available for browsers, and not just in app form.
There can be a 'youtube for kids' and associated advertisement partners, but I think there is also demand for a 'youtube for adults', and I mean somewhere where the language may be less controlled, not porn or softporn, just adults that know what is real and what is virtual.