When Netflix (NFLX -0.95%) missed its subscriber projections in the second quarter, some analysts proclaimed that the streaming service's era of massive audience growth had come to an end.

That was a foolish proclamation, because this company has a long history of following down quarters with ones that exceed expectations. The streaming giant now has nearly 159 million global members, and its revenue growth has been consistently over 20% each quarter. (For example, it was 31.1% in Q3.)

Netflix may not always meet its short-term targets, but it has shown that it can deliver on a longer-term basis. The company does have huge and ongoing content creation costs, but even those will someday ease off, making it even more profitable, and a great stock for your retirement portfolio

The Netflix home screen.

Netflix has to continue investing heavily in original content. Image source: Netflix.

A long-term play

In an ever-more crowded streaming space, Netflix has held onto its position the clear leader. That won't change even as Walt Disney (DIS -2.68%) launches its new streaming service in November. Its looming arrival did lead Netflix management to slightly lower their projections for the full year, but the company's growth rate remains astounding.

"There are obviously a few new competitors launching in the near-term and we try to factor that in as well," said CFO Spencer Adam Neumann in the Q3 earnings release. "Inevitably, there's probably going to be some curiosity and some trial of those competitive service offerings. So when we put all that together -- again, we adjusted our forecast slightly, it's still nearly 27 million paid net adds for the year, a tremendously strong year, and furthermore, ... our long-term outlook is unchanged in terms of the long-term opportunity for the business."

In other words, Disney can succeed (and probably will), and it will only be a minor headwind for Netflix. The reality is that consumers will subscribe to multiple streaming services, and Netflix and Disney+ will be must-haves in a large fraction of U.S. homes.

The company has built a deep catalog of shows and movies that gives it a competitive edge over most competitors. Disney likewise has an intellectual property vault that will give it instant status as a streaming player the moment it arrives, but the number of other companies that can say that is tiny. Netflix has invested billions of dollars in content, and continues to do so every year. The resultant moat isn't just keeping rivals away -- it's holding consumers in.

The Crown or Stranger Things will still be viable archive shows 20 or 30 years from now in the same way Disney's archives are. Building up a library like that in this now-crowded space is something few companies can do successfully (though Apple appears ready to try, and has the funds to invest).

It gets better

Once you have a subscriber base, you can reduce your spending on content. Netflix is still in a growth stage where it needs to develop a large amount of fresh content for new territories and multiple languages. It will, of course, always need to keep premiering new shows, but eventually, its archive will become a major part of its appeal.

You could argue that for a new subscriber in the U.S., the latest shows barely matter. Anyone joining today has dozens of high-quality older series to catch up on, along with movies, comedy specials, and documentaries.

Netflix hasn't taken its foot off the gas in its home market, but at some point a few years down the road, it will. That will slow its cash burn and increase its profits.

This stock isn't a short-term play. The company's going to have painful quarters where spending exceeds revenue. Eventually, though, as spending becomes strategic, the company's profits will be predictable and substantial. It will be then that the patience of investors who took a buy-and-hold approach will truly pay off.