Personally, I think this is great news. Competition is a good thing. If Youtube was the only destination for video, that type of monopoly would - eventually - prove to be bad for everyone. Even if it is "do no evil" Google.
Several months ago, I canceled my TV service. I use Hulu quite often to watch the shows I want to see. They are always there, commercial interruptions are minimal and video/audio quality is good. And that is just using VGA cable from my laptop to DLP HDTV @ 720p res and a headphone-to-RCA output to my HTR.
I upgraded my internet service to 6mbps down for only $5 extra / month. Canceling the TV service saves me more than $70 / month. Obviously, I come out way ahead here.
Hulu.com is a great service and I disable ad-blocking for the site and try to actually click an ad every once in a while. I want this model to work. It's unobtrusive, on-demand and costs me exactly what is should: Nothing.
If I'm going to have commercials shoved down my throat, then it should not cost me money to view the content. That's what the advertisers are for. The traditional cable TV service model is on the way out. Good riddance - I'll not miss it in the least.