A good way to invest is to pick a broad secular trend and put your money into companies riding the wave. Those companies can benefit from outsize growth opportunities as the world changes and consumer behavior shifts. Your portfolio's returns could get a boost as well. 

Streaming entertainment is one such space that continues to receive a lot of attention. The internet completely revolutionized how people watch video entertainment, and there are numerous companies all vying for a piece of the growing pie. 

The good news is that investors don't have to try to pick a single winner in the streaming industry. Here's why. 

A person pointing a remote control at a TV screen showing a streaming menu.

Image source: Getty Images.

Betting on the entire trend 

One course of action would be to wait until the so-called streaming wars are over to see who the winners end up being. That would take the guesswork out of the equation and make it so that investors don't have to try to predict the future competitive landscape of a complex and changing industry. 

Streaming is not a new phenomenon, though, and there are already some winners. With over 232 million paid memberships as of March 31, Netflix deserves credit for pioneering streaming. Co-founder and former CEO Reed Hastings correctly predicted that video entertainment would become extremely popular because it was much more convenient and affordable for consumers. 

He was right, and he positioned his business to capture this opportunity before others caught on. Netflix's first-mover advantage resulted in it finally producing positive free cash flow, with $1.6 billion in 2022 and a projected $3.5 billion this year. 

Walt Disney, which counts 231 million subscriptions to Disney+, Hulu, and ESPN+, can also be viewed as a dominant player in streaming. What's really impressive is that Disney+, with 158 million customers, was launched as recently as November 2019, so its growth has been noteworthy. Owning incredibly valuable intellectual property, including Lucasfilm, Marvel Studios, and Pixar, allows the business to find new ways to monetize the characters and storylines that connect well with audiences. 

The issue, though, is that Walt Disney's direct-to-consumer (DTC) segment, which houses its streaming operations, is far from profitable. It posted an operating loss of $1.7 billion in the six months ended April 1. 

There are more options besides these two. Warner Bros Discovery, home to the new Max service that combined HBO Max and Discovery+, has 98 million subscribers, but the company is saddled with a massive debt burden of nearly $50 billion.  

Because the competition is so intense, instead of trying to pick one winner, investors might be better served by taking a basket approach, owning multiple companies in the streaming space as a way to play the secular trend. 

Lots of companies are riding the wave

Outside of the big-name content providers, there are platform providers in the streaming space. Roku immediately comes to mind. CEO Anthony Wood is building the leading smart-TV operating system, connecting viewers, content companies like the ones I just discussed, and advertisers that are looking to target consumers in a connected-TV environment.

The thesis is simple. As streaming continues to become more popular, with viewers and ad dollars making the shift, Roku will benefit as the platform that grows with the overall industry. 

Amazon and Apple have unique positions in the streaming landscape. Not only do they have their own direct-to-consumer offerings in Prime Video and Apple TV+, but they also have connected-TV platforms, with Amazon's Fire TV Stick and Apple TV. Their deep pockets certainly give them a solid chance of being winners in the long run. 

Alphabet deserves some attention as well. Like its big-tech rivals, it has Chromecast, a way to connect any TV to the internet. It also has YouTube, which I view as an extremely valuable asset. YouTube commands more TV time in the U.S. than Netflix, according to a May 2023 Nielsen post. And YouTube TV, now with more subscribers than Hulu, is rising in popularity. 

As you can see, investors don't have to try to pick just a single winner because there are so many investment options. By owning multiple content companies that are leading the direct-to-consumer charge, like Netflix and Walt Disney, and/or picking a company behind a platform, like Roku or Alphabet, investors could gain broad exposure to the prospects of the streaming entertainment industry.