Netflix could lose as many as four million subscribers next year as the streaming wars heat up, giving consumers a wider array of cheaper alternatives for their subscription dollars, according to an analyst’s report.

Needham analyst Laura Martin downgraded Netflix shares to “underperform” in a new report issued Tuesday, writing that Netflix will have to offer a lower priced tier to compete with the likes of Disney+ and Apple TV+, both of which offer cheaper options.

Other competitors in an increasingly crowded streaming marketplace include CBS All Access and the upcoming HBO Max and Peacock from WarnerMedia and NBCUniversal, respectively.

“Netflix’s premium price tier of $9 to 16 per month is unsustainable,” Martin wrote.

Netflix raised prices earlier this year, the latest in a series of hikes that the company has instituted to help pay for its growing slate of original content, like Martin Scorsese’s The Irishman and the popular series Stranger Things.

The streaming giant has also embarked on a high-profile production deal with former President Barack Obama and Michelle Obama. The deal will allow the Obamas’ to produce scripted and unscripted content that will be distributed on Netflix.

Martin said a new Netflix tier priced between $5 to $7 per month would likely require advertiser support to offset any negative impact to Netflix’s top line revenues.

Netflix has never offered commercial-supported content and has indicated that it has no plans to do so.

HBO Max is expected to debut next year, with content from Warner Bros.’ and HBO’s vast library of movies and popular TV series. It will cost $15 per month.

WarnerMedia CEO John Stankey said at a conference in New York Tuesday that HBO Max will have a “compelling price proposition” that “appeals to the entire family,” according to The Hollywood Reporter.

He said that Disney+ has half the content “we have at half the price, and we [will] have twice the content we currently have at the same price.” (Disney+ costs $6.99 per month.)

Netflix is still the global leader in streaming entertainment, boasting 158.3 million subscribers worldwide, with 60.6 million in the U.S.

But domestic subscriber growth has faced headwinds in recent quarters as Netflix faces market saturation in the U.S.

The streamer lost domestic subscribers during the second quarter, and missed domestic targets for the third quarter.

Netflix continues to pile on debt as it attempts to build up its library of original content.  In October, the company announced plans to issue $2 billion more in bonds, adding to its long-term debt load that stands at about $12.4 billion.

The company is expected to spend $15 billion this year on content alone, up from $12 billion last year, while executives are projecting a bigger cash bleed this year of $3.5 billion, versus $3 billion last year.

Netflix shares dropped more than 2 percent in early trading Tuesday after the release of the Needham report, but the stock recovered some of its losses later in the morning.

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