Hulu to axe its free tier

In a move that basically signals the end of non-paid-for online TV, over-the-top (OTT) provider Hulu is discontinuing its free tier.

huluOwned by Disney, Fox and NBCUniversal Television, the company was launched in 2008 and built a name for itself by offering free, ad-supported access to broadcast TV fare. Hulu recently got a new owner in the mix in the form of Time Warner which took a 10% equity in the business.

Right now, it offers the Hulu Plus video-on-demand (VOD) subscriptions that provide ad-free content; and sometime next year a live streaming service of linear TV feeds is expected to appear on the scene. However, like arch-rival Netflix, it is currently focusing on subscriptions-based services.

“For the past couple years, we’ve been focused on building a subscription service that provides the deepest, most personalised content experience possible to our viewers,” explained Hulu senior VP and head of experience Ben Smith. “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.”

Leading industry analysis though are already questioning the logic of the decision. nScreen Media said that without a free tier, Hulu loses a key differentiator from other competitor service and it will now be much harder to differentiate its new skinny bundle service when it is released next year.

Commented chief analyst Colin Dixon: “Hulu was originally founded on the premise of free-online-TV, so it is a big step for the company to eliminate it completely. It also could be a mistake. [There] are five reasons why the move could hurt the company, not help it: fragments the audience; reduces ad avails; disables the freemium opportunity to upsell; helps competitors; misses a golden opportunity. With a strong free component, Hulu could have established itself as the aggregation point for TV online. This is a powerful position to be in, and who knows where it could have led. After all, the Web has a habit of anointing a single company as the big winner (Google for search, Amazon for shopping, iTunes for music, etc).”