The global video streaming industry generated $372 billion in 2021. According to some analysts, that figure is projected to climb exponentially over the coming years, reaching as much as $1.7 trillion by 2030. With these kinds of numbers, it's easy to see why an investor may zero in on the streaming space. But with some of the biggest players experiencing a dip in viewership numbers over recent months, deciding which company to back is not a straightforward call.

Warner Bros. Discovery (WBD -0.71%) and Walt Disney (DIS 0.18%) are two of the biggest entertainment brands in the world, each with roots dating back a century. The key to each company's success over the years has been its ability to remain relevant. Warner Bros. Discovery and Walt Disney have both invested heavily in streaming operations over the last decade, but which company has the best chance of long-term success?

Warner Bros. Discovery is chasing multiple streaming tiers

Warner Bros. Discovery has just announced a streaming service that supplants HBO Max. Dubbed Max, the new platform will go live May 23, 2023 and will carry content previously found on HBO Max and Discovery+. (Discovery+ will continue to operate as a stand-alone service.) 

During the Max launch event, JB Perrette, Warner Bros. Discovery's president and CEO of global streaming and games, noted that one of the key reasons for moving away from the HBO brand was because the company wanted to appeal to a broader audience. "[HBO is] a brand that has been built over five decades to be the edgy, groundbreaking trendsetter in entertainment for adults. But it's not exactly where parents would most eagerly drop off their kids."

Warner Bros. Discovery also revealed Max would be available in three tiers -- Max Ad Light ($9.99 a month), Max Ad Free ($15.99 a month), and Max Ultimate Ad Free ($19.99 a month). The first two plans are in line with HBO Max's pricing, while the Max Ultimate Ad Free is entirely new and puts it on par with Walt Disney's Disney Bundle ($19.99 a month) and Netflix's Premium ($19.99 a month).

While Warner Bros. Discovery is making a play to join its peers at the high end of the streaming industry, it's also making moves to tackle the cost-free end of the market -- an area that neither Walt Disney nor Netflix is currently operating in.

During the company's fiscal 2022 fourth-quarter earnings call, CEO David Zaslav discussed the company's ambitions for a free ad-supported television (FAST) service it intends to launch later this year. As Zaslav explained, the organization's vast library of TV and motion picture content makes its return on investment (ROE) a unique advantage: "[W]e can create a Tubi or a Pluto without buying content from anybody by just being able to put it on ourselves," the executive said.

Walt Disney is zeroing in on IP

Walt Disney reported in its fiscal first-quarter 2023 earnings that Disney+ had lost 2.4 million subscribers. The attrition represented the first time that Walt Disney's flagship streaming service had shed users. Despite the losses, Walt Disney CEO Bob Iger projected the company's streaming unit would reach profitability by 2024, noting a renewed focus on "core brands and franchises" to help achieve that goal.

Franchises have always been at the heart of Walt Disney's business; from Mickey Mouse and Goofy to Marvel and Star Wars, Walt Disney's bank of recognizable characters and cinematic worlds has allowed it to build strong fandoms that transcend the screen. As Walt Disney's senior executive vice president and CFO Christine McCarthy highlighted in the company's Q1 investor call, a series of Marvel-themed hotels have proven "incredibly popular" in driving attendances to its parks. Indeed, Walt Disney's Parks, Experiences and Products arm generated north of $28 billion in revenue during fiscal 2022, making it the company's highest-earning unit.

The best long-term bet

Warner Bros. Discovery's decision to make its primary streaming service more family friendly is certainly commendable, but the move is coming at a time when the streaming market is relatively mature. In fact, it's possible that by removing the HBO branding from its streaming play the company could be risking some of the cachet that comes with that name.

For investors looking at Walt Disney, there may still be questions about how the company hopes to turn a profit from streaming within the next couple of years -- particularly when it's losing customers. Of course, the strength of its parks -- and its determination to double-down on franchises -- may at least assuage some fears.

Market watchers would do well to see how consumers respond to both Warner Bros. Discovery's Max rollout and whether Walt Disney can stem Disney+ losses. After all, both companies will have to continue to adapt to the challenges of an increasingly competitive streaming industry.