Their transition has VC written all over it.
It should also be noted that reddit has an ownership stake in imgur, so they must have really been concerned about the degrade in imgur experience to have done something like this.
http://techcrunch.com/2014/04/03/after-five-years-of-bootstr...
Does it mean they cut their throat or does it mean the creator just set himself up for a life of money? Genuine question, maybe this is just a way to become rich, maybe these shitty upload sites make enough money that they simply pick this way instead of keeping it pure.
Once people started shifting to sharing content mostly as really-inefficiently-compressed ten-second videos (which are still pretty large when efficiently recompressed), Imgur's original business model was dead in the water. Maybe one day gifs will be as cheap to serve as images are now—but it won't be any time in the next few years.
It's worth highlighting that Gfycat is managing to operate as a short gif/video hosting service without turning awful, though I obviously don't know what their financials look like.
Gfycat does have a homepage of popular gifs, but they've never shown them to me unless I wanted to see them. The viewer page is just the viewer.
They are still often 1-2MB however, which I'm sure adds up, compared to the jpegs they started off distributing.
I think the larger narrative is that imgur wasn't some geek's side project. It was a VC-run enterprise that will eventually find a way to be profitable. I think ultimately, this type of service is difficult to monetize. Reddit running its own makes a lot of sense.
From an experience perspective, my god, its terrible. I'm constantly being nagged to install the imgur app and sometimes Im not sure if the comments I'm seeing are reddit's or imgur's due to using a dark theme on my reddit app. Its all around a shitshow and I'm surprised reddit tolerated them for so long.