Demand for streaming has increased because large parts of Europe are self-isolating at home due to the coronavirus outbreak.
The video-streaming provider said lowering the picture quality would reduce Netflix data consumption by 25%.
But it said viewers would still find the picture quality good.
The change appears to include the UK but Netflix has not responded to the BBC’s request for confirmation on this.
The company will cut its streaming bitrates, which influence how clear and smooth videos look when streamed online.
Videos with a higher bitrate tend to look less “blocky” or pixelated, but use more data.
The announcement came after a phone call with European officials.
Thierry Breton, the European Commissioner for the Internal Market, had earlier said people should “switch to standard definition when HD [high-definition] is not necessary”.
An hour of standard definition video uses about 1GB of data, while HD can use up to 3GB an hour.
Netflix also offers ultra-high definition 4K video for some of its programmes.
Netflix’s decision to reduce video bitrate by a quarter appears to be a compromise.
“Following the discussions between Commissioner Thierry Breton and [Netflix chief executive] Reed Hastings, and given the extraordinary challenges raised by the coronavirus, Netflix has decided to begin reducing bitrates across all our streams in Europe for 30 days,” the company said.
Commissioner Breton praised the “very prompt action” Netflix took just hours after the phone call, saying it would “preserve the smooth functioning of the internet during the Covid-19 crisis”.
Netflix has not yet said whether the bitrate reduction will be applied to other areas such as North America.
Internet usage has been heightened in the last few weeks as more people work from home and avoid going out.
Telecoms giant Vodafone reported a 50% rise in internet use in Europe earlier this week.
Facebook chief executive Mark Zuckerberg said on Wednesday that the platform was seeing “big surges” as users tried to stay connected with friends.
The social media boss said the company typically saw its largest surge in use on New Year’s Eve, but that recent demand had outpaced that. BBC