After months of rumors, Time Warner officially announced this morning that it was taking a 10% ownership interest in Hulu for approximately $580 million. Time Warner also announced that its ad-supported cable networks (TNT, TBS, CNN, etc.) will become part of Hulu’s “skinny bundle” set for launch early next year.

With Time Warner joining Disney and Fox in owning and guiding Hulu (along with Comcast, which is a silent partner), these 3 big cable and broadcast TV networks owners are taking the extraordinary risk of disrupting pay-TV, the very business model that has worked so well for them for decades.

As I wrote back in May when the Hulu skinny bundle news first broke, Disney, Fox and now Time Warner are effectively setting Hulu up as a competitor to their best customers, pay-TV operators, who pay them billions of dollars per year to carry their TV networks.

As I noted then, competing with your best customers is not only an extremely risky strategy, but given the fragile state of pay-TV, the eventual outcomes are quite unpredictable. The companies likely believe that the Hulu skinny bundle will address younger cord-nevers and therefore will not compete head-on with traditional pay-TV. But that assumption is far from proven, and given the fluidity of today’s video market, even defining competitors is increasingly difficult (for example, Netflix continues asserting Amazon Prime Video isn’t a competitor, yet with Netflix’s flattening U.S. subscriber growth, this stretches the imagination).

Nevertheless, the 3 companies seem to have concluded that improving their control over their destiny, via a Hulu skinny bundle, is critical in an era of rising direct-to-consumer SVOD popularity. That may be, but how successful the Hulu skinny bundle will turn out, remains a huge open question.

As I’ve written many times (here, here, here, here), the skinny bundle model is challenged in numerous important ways. Notably, skinny bundles by definition have fewer channels for a lower price. But that in turn means narrower customer appeal. Sling TV has tried to address this by introducing additional tiers. But by the time you add the desired tiers together, any meaningful cost savings associated with Sling TV vs. conventional pay-TV disappears (especially when including the cost of broadband).

This may be part of the reason that Sling TV’s growth is already likely leveling off, judging by its parent, Dish Network’s Q2 earnings, with subscriber losses tripling to a record 281K, up from a loss of 81K in Q2 ’15.

The fact that all of the Time Warner cable networks appear poised to be part of Hulu’s skinny bundle means its retail price will continue to balloon. Still unknown is whether Hulu’s skinny bundle will include all 4 of the main broadcast TV networks, which would broaden its appeal, but further drive up its own costs and its retail price. Even at $40/month retail it’s questionable whether there’s enough cost savings to compel a cord-never to adopt.

All of this is part of the uncharted territory that Disney, Fox and now Time Warner will be exploring with the Hulu skinny bundle. It will be fascinating to see how it unfolds.