According to Yahoo! Finance, entertainment stocks collectively lost $500 billion in 2022. Indeed, 2023 has continued to pile pressure on companies such as Walt Disney (DIS -0.60%), Netflix (NFLX 0.77%), and Warner Bros. Discovery (WBD -0.14%) as their valuations have continued to underwhelm. However, each of the three companies are executing strategies that could yet lead to long-term growth.

Walt Disney

While Disney+ is one of the most popular streaming services in the world, the platform has never made money for Walt Disney. Indeed, in the fourth quarter of fiscal 2022, Walt Disney's direct-to-consumer (DTC) streaming unit lost approximately $1.5 billion -- more than twice as much as the same period a year before.

Bob Iger returned as Walt Disney's CEO in November 2022, and quickly made clear his intention to find efficiencies at DTC. The executive has said that Disney will focus on programming that drives streaming subscriptions, while also working to bring down overall content costs by $3 billion. The approach forms the backbone of Walt Disney's plan to make DTC profitable by the end of fiscal 2024.

Netflix

After somewhat of a rocky run in the first half of 2022, when it lost subscribers, Netflix has managed to bounce back, expanding its lead as the most popular streaming platform in the world. Nonetheless, the company is not resting on its laurels, and is pushing to develop a video game unit.

Netflix first got into the video game space in late 2021, launching a batch of iOS and Android titles that were made exclusively available to its customers. More recently, the company has discussed plans to move into the cloud gaming space which, according to IMARC, was worth just over $1 billion globally in 2022. The research firm projects that figure could climb to 13.5 billion by the end of 2028.

For Netflix stakeholders, the potential for such gaming growth should help alleviate concerns of saturation of the streaming video space.

Warner Bros. Discovery

With just under 100 million global streaming subscribers, Warner Bros. Discovery is noticeably smaller than both Walt Disney and Netflix. But as CEO David Zaslav explains it, the company has a larger catalog of movies and TV shows than its competitors, calling it "one of the most valuable content libraries in the world."

Warner Bros. Discovery has monetized much of its content bank by licensing it to free, ad-supported TV operators (FAST) Roku and Fox's Tubi. Separately, Warner Bros. Discovery has outlined plans to launch its own FAST service later this year.

For investors, Warner Bros. Discovery's move into FAST comes as the space is starting to heat up; research outlet Omdia says the FAST market was worth $4 billion in 2022, and could increase to as much as $12 billion by 2027.

The long view

Walt Disney, Netflix, and Warner Bros. Discovery may all currently be trading at lower rates than they were in recent years, but they have seemingly all identified legitimate opportunities for growth. Of course, should macroeconomic factors continue to weigh on their operations, then stakeholders may not see significant returns in the near term.

But when it comes to long-term growth, each company's respective strategy may drive notable returns. Investors considering these companies would do well to pay attention to how the streaming market evolves over the coming year, and whether the current market suppression holds to the second half of 2023.