My block falls apart in the air as it's dropping instead of when it hits the ground At 7:26 it shows his block gets destroyed when it hits the ground, mines gets destroyed mid air, help? Physics won’t work basically :3

The tutorial is using blender 2.66 which is fairly old (considering we are at 2.71) so instead of having to record the game simulation you can actually do it through the simulation tab in cycles or blender internal without having to touch the game engine. Look up a tutorial on rigid body in blender and that should be what your looking for.