Netflix will reduce data usage by up to 20 percent and also promises to offer better-looking streams.
Visually simple shows and movies will be able to stream in high-definition over a slower connection such as DSL or wireless 3G.
The company, working on this new technology since 2011, will achieve these by making changes on the way it encodes its entire library.
The streaming service will run an analysis on each title to determine how it should be encoded based on its complexity.
Cartoons are easier to shrink compared to live-action movies.
"Imagine having very involved action scenes that need more bits to encapsulate the information versus unchanging landscape scenes or animation that need less," Netflix wrote on its blog on how to reduce data usage.
"This allows us to deliver the same or better experience while using less bandwidth, which will be particularly important in lower bandwidth countries and as we expand to places where video viewing often happens on mobile networks."
The new technique will "automatically identify" the kind of movie it will encode, and uses that information to intelligently shrink its file size, resulting in bandwidth savings up to 20 percent" according to a report by Fortune.
"Our continuous innovation on this front recognizes the importance of providing an optimal viewing experience for our members while simultaneously using less bandwidth and being better stewards of the Internet," the Netflix team wrote.
In North America, Netflix accounts for 37.1 per cent of downloaded web traffic during primetime hours according to Sandvine. "Real-Time Entertainment (streaming video and audio) traffic now accounts for over 70 per cent of North American downstream traffic in the peak evening hours on fixed access networks. Five years ago it accounted for less than 35 per cent," the Canadian research wrote.
That means that Netflix's plans to reduce data usage could also reduce a major amount of data transferred on the Internet.
