We have been playing around with our encoding profiles to try to find a good balance, so some videos might have higher caps than others. Unfortunately a large amount of our users are still in areas with horrible connections, so we have focused mostly on reducing buffering and start times. But now that we've been able to tackle that and improve our CDN's our content quality and UHD video are next on our list.
But you can't offer HD with a bitrate that's too low even for proper SD. There are simply too many compression artifacts.
I for one would not subscribe to an HD (streaming) plan if my connection wasn't good enough for it. Your problem here is that you're trying to have both sub. plans work for all users, which you can't do without being dishonest about it.
Maybe just offer a download option for HD with proper bitrates? Then even the lowest connections can make use of it, because the download doesn't have to be streamable.
We originally got our bitrates from Netflix, and their HD seems to cap out at 5800. Unfortunately due to licenses we can't offer downloads, but we're hoping to add a way to allow a video to fully pre-buffer in HD before watching as an alternative to adaptive bitrate switching.
Yeah, Netflix is notorious for cringeworthy bitrates, you shouldn't look up to them. :-)
In a perfect world, streaming services should thrive to provide the same quality as their retail counterparts, or even better in this age. Technology allows it.
But the sad reality is that Netflix's 1080p is just 5800, whereas a Blu-ray usually has at least 20000, going to >35000 even. Consumers are basically ripped off in this situation, because the quality is sacrificed sometimes even up to 90%, making even TV a more viable viewing choice.
I'm sorry to be so blunt but given that Netflix has over 75 million subscribers it's far more likely that you're out of touch with what the majority of consumers are happy with. In an ideal world we could all stream 4k lossless video, but the real world has bandwidth limitations and plenty of people are quite happy with the video quality Netflix offers. Frankly, outside of niche places like audio/video-phile sites or the occasional tech site remark I've literally never heard anyone remark about poor video quality on Netflix.