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Netflix Inc. (NASDAQ: NFLX) is continuing to expand its footprint in terms of its international numbers, but it faces some stiff competition domestically in the form of Disney and Apple entering the online streaming industry. With this competition comes tough questions that Netflix will have to answer going forward. As a result, one analyst took a renewed look at the streaming service and where it could go from here.

Needham issued a call on Tuesday morning in which the firm downgraded Netflix to Underperform from Hold and said it anticipated as many as 4 million subscriber losses in 2020 amid increasing competition in the streaming market.

The firm also noted that Netflix needs to add in a lower-priced service to compete with new entrants (such as Apple, Disney+, Hulu and CBS) but that its balance sheet will not really support a lower-tier priced service.

In the report, Needham detailed:

We project NFLX will lose 4mm US subs in 2020 at its premium priced tier of $9-$16/ month. We believe NFLX must add a second, lower priced, service to compete with Disney+, Apple+, Hulu, CBS All Access and Peacock, each of which have $5-$7/month choices. Since NFLX’s balance sheet cannot withstand lower revenue (our view), we recommend a 6-8 minute/hour ad load to supplement a $5-$7/month consumer fee.

Shares of Netflix traded down about 1.7% on Tuesday to $297.33, in a 52-week range of $231.23 to $385.99. The consensus price target is $361.18.

Netflix has underperformed the S&P 500, with its stock up only 13% year to date. In the past six months, the stock is actually down 14%.