YouTube Premium (previously called YouTube Red) is the only (legal) way to watch YouTube Originals. Sure, the service gets you ad-free video viewing, background play, and a subscription to Google Play Music, but YouTube had to push the service with a bigger incentive.
That came to be YouTube Originals, TV show-like series from various huge creators that required the subscription to view. Many of them are quite good too! However, YouTube likely saw that Originals aren’t why most people are paying for the service. Just going ad-free is great as it is. Plus there are a lot more views to gain from making the shows free.
Thus the company has decided to make all YouTube Originals free with ads by 2020. We don’t know if there will be strategies like release delays to keep people coming to YouTube Premium, but the company will continue bankrolling productions for Originals.
I don’t think this will hurt YouTube Premium subscriptions in the least, but it will allow a lot more people to view the great content that’s currently hidden behind a paywall.