When it comes to streaming companies, there are perhaps no bigger giants than Walt Disney (DIS -0.26%) and Netflix (NFLX -2.60%). Each counts subscriber numbers north of 200 million, and both offer plans designed to appeal to premium and cost-sensitive consumers.

But for investors, which stock holds the most long-term promise? Let's break it down.

Walt Disney tries to steady the ship

Walt Disney has had some bumpy few weeks. The company recently reported fourth-quarter 2022 results that saw it miss analyst expectations, and its streaming operation -- which includes Disney+, Hulu, and ESPN+ -- recorded losses of $1.5 billion, more than twice as much for the same period in 2021.

Investors reacted harshly, sparking a 13% drop in Walt Disney's share price.

Stakeholder confidence wasn't the only thing to fall away after the earnings. On Nov. 20, 2022, Walt Disney's board announced it had removed Bob Chapek as CEO. His replacement? Predecessor Bob Iger.

Iger's encore

Iger ran Walt Disney from 2005 until his departure in early 2020. During that time, the company acquired Pixar, Marvel Entertainment, and Lucasfilm -- a triumvirate that has collectively generated billions of dollars in box office receipts and contributed a plethora of characters for Walt Disney to exploit across toy lines, theme parks, and more.

Put simply, under Iger, Walt Disney's market cap grew from $60 billion to more than $210 billion.

Despite his previous successes, Iger's second tenure as CEO is likely to be much less storied. Walt Disney has said Iger is only signed to a two-year contract, and one of his primary objectives will be to find a successor. For stakeholders, that may raise questions about how effective Iger can be, particularly considering the macroeconomic headwinds the company is facing.

A challenging environment for advertising

Walt Disney is set to launch an ad-supported Disney+ tier on Dec. 8, 2022. Priced at $7.99 per month, the new offering supplants Walt Disney's previous ad-free entry-level plan, which is increasing to $10.99 per month. Many industry experts have been bullish on the move, with analyst MoffettNathanson projecting U.S. Disney+ ad revenue could be worth almost $3 billion by 2027. But in the near term, the ad market is looking less rosy.

Alphabet (GOOGL -0.37%), Meta (META 0.22%), and many other companies that rely heavily on ad income have experienced slowing revenues this year, and in the entertainment space, Roku (ROKU 0.45%) has witnessed a slowdown in marketing spending that has carried over two consecutive quarters. Indeed, Roku expects sluggish ad spending will continue into 2023.

Netflix is not immune from the ad-pocalypse

Netflix launched its own ad-backed plan earlier this month, and at $6.99 per month, it's the cheapest way for people to access the service. But as with Walt Disney, the company is facing the same economic challenges -- something that hasn't bypassed industry experts.

"I'm a little skeptical as to how many people do save a few bucks, or are going to be willing to tolerate ads in what I would call long-form entertainment programming," said John Malone, chair of media company Liberty Media (BATR.A -0.46%).

Speaking with CNBC, Malone also suggested Netflix and Disney+ will suffer from customers switching from plan to plan, company to company.

"You're not going to be able to spend a fortune on advertising and promotion in customers, because the churn will kill you," he said.

It's too soon to know how popular Netflix's ad-supported plan will be, but the company has reportedly projected 40 million customers will sign up for it by the end of 2023. But MoffettNathanson is less confident; it predicts Netflix will have about 21.5 million ad-supported customers over the same time frame.

Betting on long-term results

As challenging as the near-term ad-market may be for Walt Disney and Netflix's nascent offerings, both companies have navigated challenging periods in the past. Indeed, there were concerns about how streaming might fare at the beginning of the COVID-19 pandemic, and both Walt Disney and Netflix saw immense growth throughout 2020 and 2021.

When it comes to which company is the better buy right now, Netflix's continuity of leadership likely positions it as the better investment in the near term. Iger's focus on finding the next leader for the company is something that will surely occupy his attention for a while, leaving open the question of what else he can really do over the next two years. For Netflix, a distracted competitor is surely a weaker one.