Hulu started life a decade ago as a destination to watch free TV online — back then, in the early days of YouTube, the media conglomerates that created Hulu were worried that they’d be cut out of the viewing equation if people gravitated to free online video (pirated or otherwise).
Since then the world has changed, and now Hulu’s original raison d’être is officially coming to an end: The company said Monday it will no longer offer free episodes of shows on its website. Instead, free programming from Hulu will be available on Yahoo, with an eight-day delay after initial broadcast.
Why is Hulu ending the free lunch? Arguably, the free-to-watch episodes from ABC, NBC, Fox and Hulu’s array of cable partners have been valuable on-ramp to push users toward its subscription plans, which provide full seasons of shows and access to a growing number of original and exclusive series.
But Hulu — which last week added Time Warner as a 10% owner alongside Disney, 21st Century Fox and Comcast — no longer wants people to think of TV as something they can get for nothing. One big reason: It’s putting together a cable-like subscription bundle of TV channels, which it intends to launch in 2017. Even a relatively limited sampler platter of free, premium television content conflicts with that proposition.
In effect, while Hulu began as the online version of free broadcast TV, it’s now morphing into a unique virtual pay-TV provider — a place where you’ll not only be able to catch live sports and news, but also exclusive shows and full seasons of previously aired TV shows. Hulu will now be fighting on the two competitive fronts: It’s hoping to outflank Netflix and Amazon by playing the live-TV card, while beating over-the-top players like Dish Network’s Sling TV and Sony’s PlayStation Vue with a robust SVOD lineup.
The change for Hulu didn’t happen overnight. Over the past few years, it has extended the window for TV episodes from being available free the next day after air, to one week later (while paying subscribers have been able to watch next-day episodes, in addition to full current seasons), while encouraging free viewers to upgrade to a paid plan.
At the same time, it has bulked up on original series like Stephen King’s “11.23.63,” Mindy Kaling’s “The Mindy Project,” psychological thriller “Chance” starring Hugh Laurie, “Difficult People” from Amy Poehler, “The Path” starring Aaron Paul and Michelle Monaghan, and an adaptation of Margaret Atwood’s “The Handmaid’s Tale” starring Elisabeth Moss. It also has inked licensing deals for popular TV programming like Showtime’s “Homeland,” Fox’s “Empire” and “Curious George.”
Ultimately, “free TV” lands outside the Hulu brand wheelhouse. The ad revenue Hulu generates from free viewers is certainly less than the revenue it pulls in from subscribers who shell out $7.99 each month for the basic plan (and still are shown ads!) or $11.99 per month for the ad-free tier. While Hulu still sees some upside from delivering free TV content through Yahoo and other partners, it’s really hoping to train consumers that for the best experience, they’ll have to pay up.