The streaming video market is more competitive than ever before. Roku (ROKU 2.55%) and Warner Bros. Discovery (WBD -0.19%) are two companies in the space with wildly different business models, but which stock will do better for your portfolio? Read on to see why two Motley Fool contributors come down on different sides of the debate. 

The case for Roku  

Parkev Tatevosian: My investment thesis for investing in Roku is based on the structural advantages streaming holds over cable. Roku partners with manufacturers to sell TVs enabled with the Roku operating system. Once in the ecosystem, Roku takes a percentage of all consumer transactions on the platform. Furthermore, Roku earns a portion of the ad revenue from users on the Roku operating system. 

Already, Roku has the top streaming operating system in the U.S. In the process, Roku has gained 61.3 million active accounts as of March 31, a 7.7 million increase from the same time in the previous year. Its average revenue per user (ARPU) in the quarter that ended in March increased to $42.91 from $32.14 the year before. Roku is adding millions of new customers and earning more from each one. It's net revenue has risen to $2.8 billion in 2021, from $513 million in 2017.

The near term might be volatile for Roku as it grapples with the headwinds from the economic reopening, but it has a tailwind at its back in the long run. The structural advantages that streaming holds over cable and satellite are unlikely to reverse. It's not as though one day consumers are going to wake up and say they prefer less convenience, less value, and less flexibility. 

One of the only reasons to hesitate about Roku's stock is its expensive valuation. At a price-to-earnings ratio of 87.6, Roku's stock is not cheap. However, if it keeps growing users, ARPU, and overall revenue at the rate it has been, it could only be a matter of time before it expands into its valuation.

Don't underestimate this new media giant

Keith Noonan: Roku has a great business model, and I think the stock looks like a great long-term buy at current prices. However, I don't think that investors should sleep on Warner Bros. Discovery. 

HBO Max offers a strong lineup of premium content, CEO David Zaslav has done an incredible job building the Discovery side of the business, and the company also has some key advantages compared to streaming-only players. While current market leader Netflix is limited to subscription sales and the revenue it can generate from its upcoming ad-supported service, Warner Bros. Discovery still has theatrical and legacy television distribution channels and a solid merchandising business. These other avenues for generating revenue also help the company justify production budgets for the kind of premium content that looks increasingly important in the evolving streaming market. The company also has strong live sports content and a video game business that has scored some big hits. 

With the U.S. economy likely entering a recessionary stretch and Warner Bros. Discovery recently announcing that it would be laying off 30% of its advertising staff, it's not surprising that the stock has been struggling lately. Shares now trade down roughly 41% from their price when they started trading on the market post-merger in April. Even amid the challenging backdrop for the broader market, that's a precipitous drop in such a short period of time, and the big sell-off has created a worthwhile opportunity for investors. 

Warner Bros. Discovery has one of the strongest content libraries in the entertainment industry. It also has the benefit of owning a wide variety of creative studios capable of delivering content to meet a wide variety of audience tastes and budget levels, and the stock looks to have attractive upside after recent sell-offs. 

So which stock is the better buy?

Both Roku and Warner Bros. Discovery could deliver strong returns at current prices. For those seeking potentially explosive growth plays, Roku is probably the more attractive candidate. Meanwhile, Warner Bros. Discovery trades at multiples that put it in big value territory. Unless you're only interested in owning a position in one streaming player, it's worth considering both stocks.