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Hulu is eliminating its free, ad-supported streaming service

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You can pay for a subscription or watch free on Yahoo

There is an odd game of musical chairs happening in the world of streaming television. Hulu, the service co-owned by many of the major broadcasters, announced that it will be eliminating its free tier, moving to a subscription-only model. At the same time, Yahoo announced a new streaming service, "Yahoo View," which "features" Hulu, and will let viewers see the five most recent episodes of the big broadcast shows for free. So consumers will still have largely the same set of choices, just in different places, and paid for by a different set of corporate backers.

Hulu is co-owned by Walt Disney, 21st Century Fox, Comcast, and as of last week, Time Warner. These companies want to use Hulu as a hedge against Netflix, where they sell their content and compete for time and consumer dollars. Making Hulu subscription-only allows them to better position it as a premium service that can house original content. By shifting it's lowest margin ad-supported streaming over to Yahoo, Hulu's ownership reduces friction with its own TV advertisers and positions Verizon, which just acquired Yahoo, as a source of substantial future revenue.

Yahoo is the new home of free Hulu

Hulu will still have advertising. The two current paid tiers — $7.99 a month with some ads and completely ad-free at $11.99 a month — are going to remain. The free tier being eliminated didn't have nearly the library of either of these paid options, and it was web only. For now Yahoo View will also be desktop web only, although the company promised in its announcement that a mobile website and app are coming.

This pricing has always been one of the reasons Hulu has occupied a slightly awkward position. It's owned by incumbent players in the world of television, but offers many of the same disruptive features as other cord-cutting options. This new structure helps to remove some of that friction, creating a standalone Hulu that is accessible only to paying subscribers, while preserving the free option under the umbrella of a different corporation.