Animated Opacity is Pixelated

I am working on a project for a client that includeds lots of images fading in. Currently all of them appear and render very pixalated as they fade in.

This is what the image looks like with 50% opacity. 

The only thing that I can think may be casuing it is that I imported a multi layer image from Photoshop as the layers that are animated to fade in. 

Any ideas?

Thank you in advance for your help!