Hulu Bids Goodbye To Its Free Service

By Shalini Ramachandran and Deepa Seetharaman 

Free Hulu is coming to an end.

Don't cry too much. We've all known that the streaming video service has been emphasizing its subscription offering over its free service for the past couple years. But Hulu's deal to license its free content to Yahoo, announced Monday, is the last nail in the coffin.

Over the next few weeks, Hulu says, it will phase out its free offering, which until now has allowed people to watch the most recent five episodes of several ABC, NBC and Fox shows for free, after an eight day delay.

Viewership of free Hulu has declined and relatively few Hulu visitors today stream those episodes. As Hulu has beefed up its subscription offering with originals like "Casual" and library deals for big titles like "Seinfeld," it has promoted those on its site, making the free episodes increasingly difficult to find.

"Our limited free offering simply isn't aligned with our focus on creating the best experience possible and delivering the best content we can to Hulu subscribers," said Hulu Senior Vice President and Head of Experience Ben Smith.

The move shows how far Hulu has evolved from its origins. The company launched in 2007 as a free, ad-supported service carrying full-length episodes of recently-aired broadcast TV shows, in a bid by its media company owners to battle digital piracy and offer an alternative to YouTube.

It launched its subscription tier in 2010 and then began offering a higher-priced ad-free service last year. The company is now in talks with TV channel owners to create a virtual cable TV service with live channels and on-demand programming that would launch next year.

Time Warner Inc. last week said it has agreed to buy a 10% stake in Hulu, joining existing owners Comcast Corp., Walt Disney Co., and 21st Century Fox.

Hulu's news came as Yahoo said it would launch a new online video portal called Yahoo View just seven months after shutting down its previous video hub called Screen. Hulu's free show episodes will anchor the new offering, but Yahoo said it would also make available short video extras as well as posts from Tumblr about the content.

Eventually Yahoo may include a section showing users the outfits worn by characters in a show, powered by Polyvore, said Jess Lee, vice president of product at Yahoo. Yahoo said it has no plans to get back into original programming, which proved to be a money-losing venture.

Hulu and Yahoo will split advertising revenue with ads sold by Hulu. "Hulu, through its partnerships and ownership structure, has very high (advertising rates), that's a known fact in the industry," said Phil Lynch, Yahoo's head of media partnerships.

Already, the free episodes available on Hulu can also be found elsewhere on the web. Hulu has other distribution partners like Comcast's xfinity.com, People.com, Time.com, and Vulture. In addition, each of the broadcast networks' sites, like abc.com, nbc.com, and fox.com, carry those recently-aired episodes.

Yahoo's Mr. Lynch said it is too "premature" to say if this content would appear on Verizon Communications Inc.'s Go90 online video service after Verizon's deal to buy Yahoo is finalized.

After Yahoo started Screen in 2013, it spent more than $100 million to produce its own shows, excluding the cost of employees, and brokered deals to syndicate high-profile shows like "Saturday Night Live." Yahoo Chief Executive Marissa Mayer hoped it would bring in premium advertising dollars, but Screen failed to gain traction with users or create a meaningful source of revenue.

Write to Shalini Ramachandran at [e-mail] and Deepa Seetharaman at [e-mail]

(END) Dow Jones Newswires

August 08, 2016 10:45 ET (14:45 GMT)

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