By Dr. David Eifrig

One thing is certain… Streaming is the future.

Take the music industry – it has entirely shifted to streaming. CDs and iPods are irrelevant. How about the video industry? DVDs and DVD players are now things of the past.

Betting on innovative streaming companies should pay off down the road.

But which streaming service will win?

If you have the foresight to answer that question, you’ll make a lot of money.

Ten years ago, if your answer was Netflix (NFLX), you’d be sitting on a small fortune today… If you bought Netflix’s stock in November 2009, you’d be up about 3,500%.

Netflix changed the game with its original content, vast library of shows and movies, and simplicity. It’s the clear leader in the video-streaming space right now, with nearly 160 million subscribers globally.

But the gap between Netflix and everyone else has been shrinking.

Amazon (AMZN) is becoming a contender with its Prime Video streaming service. If you’re an Amazon Prime member, you automatically get Prime Video, giving it a huge advantage since the online monolith has more than 100 million Prime members. Original shows like Tom Clancy’s Jack Ryan and Carnival Row have been well-received by fans.

And Hulu has about 30 million subscribers. Although Hulu is a fraction of Netflix’s size, it grew nearly 50% last year. With hit original shows like Shrill and The Handmaid’s Tale, Hulu is becoming a formidable foe.

Then you have a host of other streaming services like Apple TV+, Showtime, HBO Max, DirectTV Now, and CBS All Access. And every network that has been taking a beating because of the cord-cutting movement is planning to come out with its own streaming service.

So which streaming service has the best shot to win over the next few years?

It turns out there doesn’t need to be one winner… According to Deloitte’s annual Digital Media Trends survey, the average U.S. consumer subscribes to three video-streaming services.

But a streaming service needs to do one critical thing to attract customers. Each company needs to convince potential customers to download another app and sign up for another monthly charge. Subscribers aren’t going to do that to get access to just one or two shows… or even five shows.

These streaming companies need a huge catalog of high-quality content to attract new customers. The customer must need those shows and movies, not just be slightly interested in watching them.

To have such a huge catalog, a business needs billions of dollars to either produce shows or buy the rights to them. And to get those billions, it helps if that company already has a lot of customers.

Video-streaming is a tough business. It’s hard to bet against Netflix, given its strong position already. And it’s hard to bet against Amazon in just about any business it enters.

Yet we think one other streaming service has the power to capture millions of customers. It comes from a world-class company that has the content and size to take on both Netflix and Amazon.

Getting Into the Game

Media giant Disney (DIS) didn’t used to be known as a streaming company… but it is now. It launched Disney+ on November 12.

Disney+ instantly became a competitor to the top streaming services because of its deep treasure trove of content. The company has so much beloved content and can use its characters and stories to churn out hit original shows and movies for years to come… There’s the Star Wars franchise, Marvel, Pixar, and of course all of its iconic cartoon characters.

Think about how many die-hard Star Wars and Marvel fans there are. If you think they’re not going to pony up for Disney+, you’re crazy.

Think about how many die-hard Star Wars and Marvel fans there are. If you think they’re not going to pony up for Disney+, you’re crazy.

Disney+ will be for everyone. Children, sci-fi fans, action fans, and even those strange High School Musical fans will want to buy a subscription. And the price of Disney+ is between $6 and $7 a month – about half the cost of a standard Netflix plan. That makes it a no-brainer to purchase.

Disney+ has around 7,000 TV episodes  and 400 to 500 movies. Compared with Netflix, that’s still not very big.

According to research firm Ampere Analysis, the TV shows on Disney+ only amount to about 16% of what Netflix offers. And the movie library will be roughly eight times smaller than Netflix’s.

Don’t let that stat fool you, though… For Disney+, it’s all about quality.

Disney having its own streaming service also means it’s going to pull its content from other services like Netflix. Marvel’s new Captain Marvel movie will be the first movie to stream exclusively on Disney+. And of course, Disney officially closed its $71 billion acquisition of the major entertainment assets of 21st Century Fox. That means Disney will have access to popular franchises like the X-Men, the Fantastic Four, and Avatar.

The acquisition is going to make Disney’s star-loaded bench even deeper.

If history dictates how Disney will use Fox’s content, then this acquisition makes a ton of sense. Below are the top-10 grossing movies of all time, which Disney’s studios dominate.

Morgan Stanley projects that by the end of 2020, Disney+ could have 13 million subscribers. And the company could have 50 million streaming subscribers when accounting for its other services like Hulu and ESPN+. Morgan Stanley also projects that Disney+ could have more than 130 million subscribers by 2024.

We think that’s too conservative.

Disney+ will shatter those expectations.

Netflix introduced its streaming service in 2007. It had about 7.5 million subscribers (including DVD subscribers). But Netflix didn’t really burst onto the scene until a couple years later.

In 2013, the company premiered its first Netflix-produced show, the political drama House of Cards. Then it began raking in subscribers with original content like Orange Is the New Black and Stranger Things.

Netflix had about 40 million paying subscribers in 2013.

Disney+ is only projected to have 13 million subscribers by the end of next year (with other estimates only a few million higher). This is for a service that costs less than Netflix – only $6.99 a month – and with arguably more desirable original content than Netflix.

Plus, folks are primed to pay for digital streaming services. Netflix was the “first mover” in streaming TV and movies. But now Disney doesn’t have to build a new industry from scratch. And just recently, it teamed up with Verizon Communications (VZ) to offer some its customers one free year of Disney+. That alone will bring in millions of users.

The Disney+ subscriber estimates out there are far too conservative. Low expectations mean the stock should do well after investors see how many folks subscribe to Disney+.

Disney’s future firepower is going to be incredible… and Disney shareholders have a lot to look forward to.