My Netflix on the AppleTV (gen 3) has been crappy as of the last few months. It was working fine then it went to utter crap.(right about the time they introduced Super HD is when it went off the rails) Now HD hardly ever locks in, I have to stop the movie, then start it back up again and sometimes it locks in HD. Or it will start up at HD then two minutes in go really blurry and never come back to HD.
I have tried using Google's DNS, then Time warners direct DNS, then various other DNS providers and nothing has helped.
Then I decided to switch over to use my Google Chromecast and it's been flawless. I don't know why it would suddenly be better on that device but it is. So for now until Apple and Netflix can figure out what is going wrong I have decided to switch to the Chromecast. I would recommend others who are having the same trouble spend a few bucks and get one. Kind of mad I had to stop using the AppleTV since it's so much easier to control from all my iOS devices.
Let me finally add that I am seeing really high ping times from my place (Dallas, TX) to Netflix. They are bouncing up to as high as 300ms which means somewhere someones slowing down the traffic.