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Monday, August 8, 2016

Hulu drops free tier in favor of paid-only service, sends free shows to Yahoo

Video-streaming service Hulu has announced plans to ditch its ad-supported free streaming tier, an option that led many to pay for the service in the first place, in favor of an all-subscription model, according to Variety. The free tier will be slowly phased out over the next few weeks. Cost of the remaining two tiers will stay the same: $7.99 per month with commercials and $11.99 without.

Those resolute in their refusal to pay for content will have a new Hulu-made option, however, as the company has also announced plans to expand its current deal with Yahoo to create a new ad-supported streaming service called Yahoo View.

Related: Verizon buys Yahoo’s core businesses for $5 billion, Marissa Mayer staying

The new streaming network will show the five most recent installments of shows from ABC, NBC, and Fox slightly more than a week after their original air dates. That service will differ from Hulu’s ad-free one in that it will be desktop-only — meaning those with Smart TVs and streaming boxes will be left out of the Yahoo View loop. The service is already up and running as of Monday morning.

The business decision to drop ad-based streaming and export it elsewhere is a bold move for Hulu, a company whose free level has allowed millions of users access to thousands of episodes of TV shows for nearly a decade. But going subscription-only did seem somewhat inevitable for the company long-term, given that bigger streaming competitors like Netflix make much higher revenues with a paid-only model. The change of strategy was likely fueled by demands from investors, many of whom are cable providers or content makers.

Part owners in Hulu include Disney, 21st Century Fox, and Comcast, as well as Time Warner, which recently announced plans to purchase 10 percent of the internet company.

“For the past couple years, we’ve been focused on building a subscription service that provides the deepest, most personalized content experience possible to our viewers,” said Hulu senior Vice President Ben Smith in a statement. “As we have continued to enhance that offering with new originals, exclusive acquisitions, and movies, the free service became very limited and no longer aligned with the Hulu experience or content strategy.”

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