As is the case with most subscription-based markets, streaming is an incredibly lucrative industry. According to Grand View Research, the $59.14 billion streaming market will see a compound annual growth rate of 22.4% until at least 2030. As a result, the industry has attracted some of the biggest names in entertainment. 

Disney (DIS -0.07%) and Warner Bros. Discovery (WBD -2.86%) had streaming services enter the market since 2019, attracting millions of subscribers. However, steep competition in 2022 highlighted the importance of having a diverse business. 

In addition to streaming, these companies have strong footholds in theme parks, gaming, and theatrical releases. As a result, Disney and Warner Bros. Discovery are my favorite streaming stocks. Here are a few more reasons why. 

Disney

The Walt Disney Company is gearing up to enter its second century of business in 2023, proving its staying power in the entertainment world. Throughout the past hundred years, the company created and acquired some of the most popular franchises and characters on Earth that have immensely boosted its streaming efforts. 

After launching Disney+ in November 2019, the company has swiftly climbed to the top of the market. In its third quarter of 2022, Disney surpassed market leader Netflix (NFLX 0.23%) for most subscribers for the first time, retaining its lead in Q4 2022 with 235.7 million total subscribers against Netflix's 223.09 million. 

While Disney won the streaming wars this year, its efforts haven't come cheap. Throughout 2022, the company spent $30 billion on content to expand its streaming service, which hurt its quarterly earnings. In Q4 2022, Disney's media and entertainment segment saw revenue dip 3% year over year to $12.7 billion, with operating income plunging 91% to $83 million.

However, the diversification within Disney's business showed its strength, with its parks segment seeing revenue soar 36% year over year to $7.4 billion, with operating income increasing more than 100% to $1.5 billion.

Disney's climb to the top of the streaming industry came at a hefty price. However, it will head into 2023 with a dominating service and the ability to prioritize profits. In its Q4 2022 earnings report, the company revealed that it expects its operating losses to decrease, with Disney+ reaching profitability in fiscal 2024.

Along with its packed schedule of blockbuster releases, price increases across its three streaming platforms, and its flourishing parks business, I wouldn't bet against Disney in 2023. 

Warner Bros. Discovery 

Warner Bros. Discovery had a challenging year, to say the least, with its stock down 61% year to date. After the merger of Warner Media and Discovery in April saddled the new company with about $43 billion in debt, its CEO, David Zaslav, has made multiple changes with a priority on profitability. As a result, 2022 has been filled with hefty restructuring costs for the company, which hampered earnings. 

In its most recent quarter, Warner Bros. Discovery added 2.8 million new streaming subscribers, bringing its total to 94.9 million. However, revenue of $9.8 billion missed expectations of $10.36 billion, according to Refinitv. Meanwhile, operating income came in at negative-$2.19 billion as restructuring costs and macroeconomic headwinds in its advertising business hampered earnings.

While Warner Bros. Discovery financially suffered in 2022, many of its issues are likely to iron out as it gets past its post-merger transitional phase and the poor economic environment improves. 

Plenty of exciting developments are happening for Warner Bros. Discovery in 2023. The entertainment company will launch its merged HBO Max and Discovery+ platform, bringing together popular franchises such as Game of Thrones, House of the Dragon, Harry Potter, Property Brothers, and 90 Day Fiance all on one service. 

The company also brought on Marvel alumnus James Gunn to co-lead its DC film division and essentially relaunch its DC franchise with a priority on quality. The move could breathe new life into the DC extended universe and boost box-office revenue significantly. 

Lastly, Warner Bros. Discovery is not often thought of as a video game company, but in 2022 alone, it released Lego Star Wars: The Skywalker SagaMultiVersus, and Gotham Knights, with a promising slate for 2023. The Harry Potter-themed Hogwarts Legacy will launch in February, while Suicide Squad: Kill the Justice League will come later in the year. 

 In Q2 2022, Warner Bros. Discovery's content revenue rose 3% to $2.6 billion, which the company primarily attributed to high gaming revenue from the release of Lego Star Wars: The Skywalker Saga. As a result, its highly anticipated titles planned for 2023 are promising.

Warner Bros. Discovery still has a long way to go before reaching profitability. However, it has a lot to look forward to in the new year, which should bring it a whole lot closer to the end goal. And with an all-time low price-to-earnings ratio of 6.5, the streaming stock is too good to pass up and continues to be one of my favorites for 2023.