That FMV stuff looks pretty cheesy in spots, but I'm actually kind of into it. It just makes me wonder how many of those could they realistically have? And how the transitions into the band disapproving of you actually works. It seems seamless here, but of course it would.
It has to do with the FPS-style red tinge. You'll notice when the player does poorly enough the entire screen blurs red and that's when it switches to the other video track of pissed people. Once you do good enough, the screen blurs white and the video switches back.