California based Netflix announced this week that its online video subscription service added 3.6 million customers in the first three months of this year.

Netflix, which launched in Canada last September, ended March with a total of 23.6 million subscribers, 22.8 million in the U.S. and 800,000 in Canada.

The popular service, lets English speaking customers stream a broad array of movies and TV episodes to their home computer or Netflix enabled consumer electronic devices for $7.99 per month. A French version of the service is still in the works.

Netflix says it signed up 290,000 new customers in the first quarter of 2011 down from the 510,000 subscribers it signed up in the September to December period of 2010. Pundits believe the relative weakness in growth of new subscribers in the first quarter was due to growing concern among consumers that using the service could result in them exceeding their Internet service providers cap which could result in having to paying exorbitant overage charges.

To address this concern, the company last month lowered its default picture quality in order to reduce the bandwidth consumed when streaming shows and movies. The default is now a 300 Megabyte per hour stream instead of a 700 MB per hour stream resulting in about a two-thirds reduction in internet traffic.

For consumers watching 30 hours a month, about an hour a day, of Netflix, it means the default streaming rate will incur about 9 GB of internet traffic usage a month which should keep most users well below the cap.

Although the default setting were lowered, Netflix continues to offer subscribers multiple video quality settings for standard definition video long with a High Definition video stream which consumes about 2.3 GB per hour.

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