Originally posted by Konsumer
Yes, this is because Netflix uses quite a bit of bandwidth. This happens to me as well, when my sister uses Netflix. There isn't anything you can really do if you're already to the highest amount of bandwidth possible. Only think that might help it making sure your Xbox is connected via Ethernet cable, instead of wireless. It gets data delivered and received faster than wireless.
As for the host thing... If you are a host in the game, you should not lag. Seeing as how everyone is connected to you, they will be lagging due to the ping between you and them, also the ping between each other. I would suggest not hosting if you're lagging to save aggravation for others. I'm sure you don't like it when you go into a game and you can't even throw a grenade without a delay, let alone move. So why would others? :p
One simple solution: When someone is watching Netflix and you're lagging in CoD, watch Netflix as well until they are done. Might I suggest: Breaking Bad, Weeds, Skins, or South Park. Those are bound to keep you busy for countless hours.
Thanks, and how do I set a "low" bandwidth for Netflix, and a high one for the PS3?