The battle for streaming supremacy is on. In the past year, AT&T completed its acquisition of Time Warner, and Walt Disney's (NYSE:DIS) acquisition of most of Twenty-First Century Fox (NASDAQ:FOXA) (NASDAQ:FOX) is set to close in early 2019. At the same time, large Silicon Valley companies have announced ambitious plans to distribute their own premium content, all at a time when more people are cutting the cord on traditional cable bundles.

Streaming channels, if you think about it, are really just "mini-bundles," so large companies are racing to make sure their offering is one of the few "must-haves" for consumers.

A young couple embraces on the couch and the guy changes the channel with a remote control.

Image source: Getty Images.

Two of the best-positioned streaming companies in the race are Netflix (NASDAQ:NFLX) and Disney. Both are coming from different places of strength and are pursuing different strategies, however. By understanding each, you can place your bet on whichever suits your preferences.

Netflix: outspend, outsmart

Netflix is today's streaming leader, with over 130 million subscribers worldwide. As the oldest over-the-top internet video player, Netflix has also collected the most data on our streaming habits. Another competitive strength? Netflix doesn't have the burden of paying dividends to shareholders, as most competitors do. Armed with the most recurring subscription revenue and the most data, Netflix is reinvesting a whopping $8 billion in content spending in 2018.

Having more swings at the plate has enabled Netflix to land hits like Stranger Things from relative unknowns the Duffer brothers. At the same time, Netflix is also outbidding competitors for series from proven hit-makers like Shonda Rhimes from ABC (owned by Disney) and Ryan Murphy from FX (part of Fox, soon to be under Disney). Other upcoming series from marquee creative minds include the Coen brothers, as well as some guy named Barack Obama, just to name a few.

None of these creators' shows have even hit Netflix yet, suggesting the service's lineup quality is set to strengthen even more in the future. This could increase the company's future pricing power.

Disney: leveraging big brands

Disney has been one of the victims of Netflix's rise, with subsidiaries ABC and ESPN losing subscribers to cord-cutting. Nevertheless, Disney has premium, differentiated brands, as well as incoming studio content from Fox that it will use to launch three separate streaming services: one for ESPN; another for its branded studios Disney, Pixar, Marvel and Star Wars; and a third in Hulu, of which Disney will own a majority stake when the Fox deal closes.

Disney launched its ESPN+ streaming service about six months ago, and it has already topped one million subscribers. Another positive? ESPN+ doesn't even contain all of ESPN's best linear content. That's a great sign sports fans will pay higher prices for sports, whether over-the-top or in a traditional bundle.

In addition, Disney's branded service will launch in late 2019, consisting  of recent movies and original content from Disney's studios and Fox's National Geographic. Initially, the service won't have as much content as Netflix, but CEO Bob Iger hinted it will also be priced lower. It also won't have Star Wars movies at first, as releases prior to 2019 already have a second-window deal with another distributor ... Netflix.

That's right, Disney had previously awarded these second-run windows for its content to Netflix starting in 2016. Once these deals expire, those films will move off of Netflix and onto Disney. Essentially, the two services are set to swap Disney's movies and Ryan Murphy/Shonda Rimes series in the future.

Finally, Disney has hinted it will be looking to bundle Hulu with these two other services. Hulu has its work cut out, as it's still far behind Netflix with only 20 million subscribers as of May 2018. Hulu also currently loses tons of money.

Still, there's hope. Riding the cord-cutting trend and The Handmaid's Tale Emmy win for best drama, Hulu is growing. When you combine that with the potential cross-marketing to ESPN and Disney superfans, I could see Hulu turning into a better competitor going forward.

Balancing it out

Which streaming service is worthy of your investment dollars? It comes down to what type of investor you are. Disney is a stable dividend payer at a reasonable valuation, making it the safer play for value investors. However, investors should know its new streaming service will merely displace part of its current cable-based revenue and profit, so I think Disney has less upside than Netflix.

Meanwhile, Netflix is the clear streaming leader, though its stock is not exactly cheap at 75 times forward earnings. However, its leadership in a large addressable market still gives Netflix more potential upside, making it the better choice for growth investors.

Of course, owning both will give investors a diversified way to play the streaming future.

Billy Duberstein owns shares of AT&T, Netflix, and Walt Disney. His clients may own shares of some of the companies mentioned. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.