Americans are now spending more time streaming video than they are watching cable TV. In fact, streaming hours in July surpassed their peak from the start of the pandemic in 2020, according to the most recent report from Nielsen.

There are several takeaways from the latest Nielsen report that are important for any investor in media companies to know.

Sports is a major factor

There was a dearth of big live sports events in July. Both the NBA and NHL held their championship series in June, the MLB entered the dog days of summer, and football fans await the start of the NCAA and NFL seasons.

Nielsen notes broadcast networks experienced a 41% drop in sports viewing versus June, and a 43% drop from July of last year when fans watched the NBA and NHL finals in addition to the Olympic Games. Cable sports viewing dropped 15% from June and 34% year over year.

The cyclical impact of sports on cable and broadcast television watching shouldn't worry traditional media and cable company investors, but the shift of more sports rights to streaming services should.

Amazon (AMZN 2.72%) will become the exclusive home of Thursday Night Football this year. Apple (AAPL 0.41%) owns the rights to MLS soccer starting next year. It also has the rights to some Friday night MLB games, and Alphabet's (GOOG 0.77%) (GOOGL 0.75%) YouTube has a deal with the MLB as well.

More sports are shifting to streaming. Apple may end up with the rights to NFL Sunday Ticket if YouTube doesn't steal them away. Even Netflix (NFLX 2.14%), which long eschewed sports, expressed interest in certain sports rights recently. And as more people cut the cord and streaming companies vie to pick up those viewers, more sports rights will end up on streaming services instead of cable television.

Cord-cutting will cement the trend

It's likely streaming will fall back behind cable TV this fall as sports get back into full swing. But cord-cutting will eventually cement the trend of streaming taking over as the predominant form of television entertainment. In fact, cord-cutting is accelerating.

Over the past 12 months, approximately 5.43 million American households cut the cord, according to Leichtman Research. That compares to 4.55 million in the preceding 12 months.

What's particularly noticeable is that leading virtual pay-TV providers like Disney's (DIS 0.09%) Hulu and fuboTV saw declines in subscribers. That may be connected to the ease of cancelling or pausing subscriptions for these newer services during sports off-seasons versus traditional cable. Nonetheless, these new services cannot be relied upon by cable networks to offset losses in traditional pay-TV indefinitely.

The big streamers are still big

There are more streaming options than ever. From premium subscriptions to ad-supported to entirely free streaming options, Americans have a ton of content at their fingertips. Indeed, Nielsen suggests "Americans are expanding their streaming consumption and the platforms that they use."

And while people are streaming across more services than they have in the past, the biggest streaming services are still very big. The top-five streaming apps -- Netflix, YouTube, Hulu, Amazon Prime, and Disney+ -- accounted for 68% of total streaming hours in July. That's up about half a percentage point share from June. It's down more than 2.5 percentage points from last July, but most of that is due to a drop in Disney+ viewership (Black Widow premiered and Loki had its season finale last July).

Netflix has seen its share of streaming hours remain steady throughout the year, accounting for between 22% and 23% of the total. It's down slightly from the second half of last year, but with the climb in total streaming hours, Netflix has remained a key part of most American's viewing habits in 2022. And while Netflix lost nearly two million subscribers in the U.S. and Canada in the first six months of the year, those that have kept the service are using it even more, justifying its price hike at the start of the year.

Overall, Nielsen's report shows that the leaders in streaming are still a strong investment in the future of television as streaming will soon become the most popular source of living room entertainment.