I have always assumed that EMH's were a loss leader for Disney. That said, it is an important perk to us and has justified staying on site and to a degree, even buying into DVC. It always troubles me when a benefit touted as core and for so long, goes away. Disney has spent a lot of money over the years touting EMH as a primary reason to stay onsite. Extra FP's, or an E ticket night (which was a purchase option for resort guests I believe, NOT "free") do not remotely come close to replacing the value my family places on EMH. We use both, pretty religiously actually. With teens the PM has been huge as they don't want to get up early in the AM, with the morning ones, getting those top rides in early before the crush with lower crowds has been some of the most magical (and productive) mornings we have ever had. In the slower seasons it has been the only thing going on with sometimes regular park hours closing quite early. I've been frustrated more than once on a gorgeous night during non peak times, or even during F&W or F&G to find not a single park open past 8pm. I don't go to Disney to swim at that hour or hang out at my room and EMH has allowed us to enjoy parks much past that. For a family that wants to eat around 6 (which luckily isn't mine) this makes the park day end that much more early. For my family, who is on the 7:30-8:30 dinner schedule, this can limit our dining options. If the park closes at 8, dining closes earlier than that, often limiting our dining options as a result.
Cutting them back to 2 hours, removing it from Fridays at MK, they certainly seem to be migrating this way. Whether or not enough outcry will happen to make them rethink their position remains to be seen. I believe Disney may underestimate the loss they may see of onsite stays. While they may well only see xx% of resort guests actually using EMH, it is very likely that a higher % of those guests intend to use EMH, or think they well and that intention drove an onsite resort stay. To a degree, whether they used the benefit or not is immaterial, if it factored into the decision to stay onite and that option is gone, a different offsite decision is likely.
We have a large trip planned for next New Years. I have been very vocal trying to convince the rest of our party to stay onsite. At Holiday Rack rates, little discounts offered and the possible loss of EMH, probably restrictions to how many FP's you get whether onsite or not...it does make sitting in traffic trying to get in and out of the parks seem much more palatable as right now, that might be the only thing they "save" by staying onsite. The Disney resort experience only goes so far by itself and the more they take away, the less attractive it becomes.