Earlier quoted context omitted.
You still care, since at some point the cost of the extra encoder-hours used is going to outpace the bandwidth savings. I'm guessing she mentally assumed 'at no bandwidth savings, how much margin do we have?', since the amount saved wasn't ever quantified.
It's not bandwidth savings. It's growing the user base. There are lots of people on low bandwidth connections. Maybe now they don't find Netflix watchable, because the video quality is to crappy. But if you can fit higher quality video into the same bandwidth, they'd become users. I agree with your overall point though, that at some point the extra cost for encode isn't worth it.
https://www.youtube.com/watch?v=S9E9xUbcYAM
Their goal is to have video of acceptable quality at 250 kbit/s, which makes Netflix an option for a lot more people worldwide.