Historically, Netflix Inc. has been averse to heavy advertising but, according to an expert, streaming's highly-evolving business landscape is likely to force the company to change its tactics.

Needham's Laura Martin downgraded Netflix shares from Neutral to Underperform late Tuesday, suggesting that the entertainment giant would lose 4 million U.S. subscribers in 2020 in the face of the explosion of new streaming platforms offering cheaper plans.

She claims that Netflix requires a lower-priced tier of its own to retain its market position and sustain its stock, and that the company should consider supporting this tier with ads given its balance sheet. Netflix shares were down 1.8 percent on Tuesday's pre-market session.

Customers May Not Like This

While the thought of ads on Netflix stream's service may spook fans who have become accustomed to uninterrupted binge-watching content, Martin's scenario calls for an ad tier as just one option that Netflix subscribers could purchase in addition to traditional ad-free levels.

Adding six to eight minutes of commercials an hour could allow the company to price this option at $5 to $7 a month, in line with Walt Disney Co's cheaper offerings and other competitors.

A cheaper tier could draw lower-income subscribers, encourage some password sharers to pony up for their own accounts, and ultimately help funnel consumers into one of the more lucrative ad-free plans for Netflix, Martin said. Netflix's lowest-price offer currently costs $8.99 a month, while its highest-priced proposal is $15.99 a month.

The analyst is doubtful that if the U.S. user pool shrinks, because U.S. subscribers are about three times more profitable by her calculations, growth in the global subscriber base will be able to support Netflix's stock.

Worst Performing Stock Of 2019

Moreover, international development "is primarily coming from only $3 per month of digital subs, so it takes four of these subs to cover revenue lost from a single U.S. sub."

Needham joins four other market observers who, according to a FactSet count, have bearish ratings on Netflix's stock out of 43 total analysts. Netflix shares have an average price target of $365.07, around 20 percent above recent rates.

Netflix stock has been so far this year's worst performer in the so-called FANG brands. Netflix shares increased 11 percent year-on-year compared to a 16 percent increase in Amazon.com Inc. shares, a 28 percent increase in GOOGL shares in Alphabet Inc. and a 54 percent increase in Facebook Inc.'s shares.