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I am really wondering whether this means they have to re-encode all the streams at 25% less bitrate, or whether they already have them available at that exact bitrate and can thus just change a default.

Because what I usually observe when Netflix compromises the streaming quality because of bandwidth problems with my connection is a far larger drop in quality than would be expected at just 25% less bits - it normally feels more like 75% less bitrate, if it doesn't switch down from HD to SD entirely.

I'm sure they already have the entire library at that bitrate as one of the standard bitrates.

In fact, you've probably gotten that bitrate in the past and just not noticed, because you have to be looking hard to see the quality difference.

I think they use DASH or HLS, which would generally mean they have everything pre-encoded.

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