Why am I getting an error message saying This app wont run unless you update Google Play services?

I have been trying to play videos on my Galaxy S3. I cannot play videos from my gallery, nor can I go into YouTube, and it only says 'this app won't run unless you update Google play services' and then it has an option of clicking update that sends you to the play store. When I click update for Google play services it tells me that i have insufficient space on my device. I had tried deleting a bunch of apps, then trying again. Also i have tried restarting my phone...and nothing.

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