Which Streaming Stock Would Hold Up Better in a Recession: Netflix or Walt Disney?

Through the first roughly seven and a half months of 2026, the S&P 500 index has continued proving the bears wrong. The popular benchmark is up 13% this year (as of Aug. 18). This performance comes after double-digit gains in each of the previous three years.

Nonetheless, it seems that people are still worried about the possibility of an economic downturn. A cooling labor market, elevated interest rates, geopolitical risk, trade and tariff uncertainty, weak consumer sentiment, and the artificial intelligence boom are on everyone's mind these days.

It's important that investors are aware of these concerns, especially as they relate to their portfolio positions. Two well-known streaming stocks, Netflix (NASDAQ: NFLX) and Walt Disney (NYSE: DIS), have lost money for shareholders in 2026. But in a recession, one of these companies will hold up better than the other.

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There's a valid case that streaming entertainment is resilient

If the U.S. economy faces an adverse scenario in the near future, consumers will certainly put more effort into stretching their budgets, as they become more discerning about where their money goes. Consequently, they will pull back spending in certain discretionary areas, like eating out, buying luxury goods, or taking vacations.

A strong argument can be made that the streaming entertainment market overall will be resilient in this situation. Given that streaming services are generally viewed as a low-cost leisure activity, consumers could keep their memberships as they spend more time at home. What's more, people can get much more utility from their subscriptions because they allow unlimited viewing.

Netflix dominates the streaming video industry. It had 325 million subscribers at the end of last year. And it's on track to report more than $51 billion in sales in 2026.

But Disney+, Hulu, and ESPN, which are the company's comprehensive direct-to-consumer offerings, also make Walt Disney a leader in media and entertainment. It has a deeper and older content library, supported by its rich intellectual property (IP). Not to mention, Disney also owns valuable sports rights that draw viewers.

In a recession, there's also a chance that more consumers will switch from premium ad-free subscriptions to cheaper ad-supported tiers. Netflix launched this offering in late 2022, and advertising is on pace to generate $3 billion in ad revenue in 2026. Disney+ and Hulu also have ad-supported tiers.

While more people opt for this option, there is a trade-off. The digital advertising market is known to be cyclical, as companies pare back their marketing budgets when consumer spending is under pressure. It wouldn't be surprising to see ad-driven streaming revenue growth slow in a downturn.

Disney's most lucrative segment is exposed to a downturn

Streaming will hold up well in a recession. Unlike Netflix, however, Disney has an extremely lucrative experiences segment that makes the overall business more sensitive to macro-level changes.

During its fiscal 2026 third quarter (ended June 27), Disney generated $3 billion in operating income from experiences. This profit figure represented 54% of the company's total. It is the crown jewel division, which brings Disney's IP to life.

There's no doubt that when times get tough, households will delay taking a trip to a Disney theme park. A seven-day visit to Disney World in Orlando can cost more than $7,000 for a family of four, a number that doesn't include airfare. The company's cruises offer more value than land-based travel. But these can also be very expensive activities that can be put on hold until the economy is in better shape. This could result in a hit to Disney's revenue and profit.

Investors who are more worried about a potentially adverse economic scenario will want to avoid the House of Mouse in favor of Netflix's pure-play streaming model.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.