When it comes to investing in the streaming wars, Netflix (NFLX -1.35%) is an obvious consideration. With more than 230 million global subscribers, Netflix is the largest subscription video-on-demand (SVOD) service in the world. However, competition is fierce, and Paramount Global (PARA -0.67%) has seen notable growth for its flagship streaming service Paramount+, adding almost 10 million customers during its fiscal 2022 fourth quarter. For those looking at a long-term bet, which is the better buy? Let's break it down.

Paramount+ as a home to big movies

Paramount Global first entered the streaming space in 2014 with the launch of CBS All Access (later rebranded Paramount+). And though it has almost a decade in the SVOD arena, it lags behind many rivals when it comes to subscribers. Despite its position in the market, Paramount Global is pushing forward with a number of strategies as it seeks to extract more revenue from the streaming space.

Starting in 2024, Paramount+ will become the de facto streaming home for movies from Paramount Global's Paramount Pictures unit. And while there's a while to go before that plan goes into effect, Paramount+ is already host to some of the company's biggest blockbuster hits. Top Gun: Maverick, for instance, made close to $1.5 billion at the global box office and became the most-streamed film on Paramount+ within days of arriving on the platform. The release was such a success that Paramount Global has cited it as a driver for its Q4 2022 subscriber bump.

A focus on FAST

Paramount Global also found success in the free ad-supported television (FAST) space. The company owns and operates Pluto TV, which at last count had 79 million monthly active users across more than 30 countries. Indeed, the service is so popular that, according to a 2022 Variety consumer study, it ranks third among most-watched FAST services.

For investors looking at Paramount Global, it should be noted that the FAST industry itself is also on a climb; video platform Plex has noted that FAST channels accounted for 6% of content in 2020, but in 2022, that figure reached 30%.

Watching Netflix's viewership numbers

While Netflix has been the dominant SVOD player for some time, there are signs its position is starting to weaken. As reported by Bloomberg, Netflix's viewership figures fell in February 2023, and some analysts believe the decline will continue through the rest of the year. Insider Intelligence projects a viewership dip of 4.1% among users aged 18 to 24 and a 2.1% drop among those aged 25 to 34.

The 18-to-34 user bracket has long been coveted by companies because of the opportunity to turn them into lifelong customers. For Netflix, the prospect of losing that user base, or worse, never substantially capturing it, is something Netflix's stakeholders may have concerns about. But on that front, the streamer has a plan: video games.

Video games as a differentiator

In 2021, the global video game industry was valued at $178 billion. By 2025, that number is expected to get close to $270 billion. And with 18- to 34-year-olds accounting for 38% of the U.S. gaming market, Netflix has plenty of incentives to make a significant play in the space.

Netflix released a handful of iOS and Android games in late 2021, offering them as exclusive downloads for its SVOD subscribers. Since that time the company has published many more, including titles that tie in to Netflix original shows such as Narcos and Money Heist. But as the streamer has made clear, it has much larger ambitions.

Last month, Netflix's VP of External Games Leanne Loombe revealed the company is working on a cloud gaming service. And while Loombe was cautious to note that its existing mobile gaming strategy will be the focus for a while, the company is working toward making its titles playable on "every Netflix device" that users own.

The future is undecided

For investors considering Paramount Global or Netflix, there's certainly a lot to consider. Paramount Global is showing real smarts by leveraging its Hollywood hits for Paramount+ and expanding Pluto TV globally, but both services are far from being top-placed. Netflix, on the other hand, has effectively conquered SVOD, only to recognize that it must move into a whole new sector if it wants to fight the threat of attrition.

Market-watchers looking at Paramount Global and Netflix should pay attention to their upcoming quarterly reports. With both companies pinning future growth on the strategies outlined, it will be interesting to see what progress they have made, and which may have the most likely chance of long-term success.