Thursday, April 7, 2011


Back in September, Blockbuster announced that they would file for bankruptcy protection. Since then, corporate executives weighed their options to try and save the company from the dustbin, but finally reserved themselves to putting it up for sale in the hopes that another company would buy it at auction. This morning those hopes came true: Dish Network stepped in to buy the company for a total of $228 million in cash.

It’s unlikely that Dish Network is interested in Blockbuster’s chain of 1,700 video rental stores and retail locations: it’s almost certain that Dish really wants to get their hands on Blockbuster’s kiosk business, streaming video services, DVD mailing services, and their agreements with movie studios and television networks that produce its most watched and rented content. It’s still very likely that many, if not all, of Blockbuster’s neighborhood rental stores will close.

Whether or not Dish Network sees fit to prop up Blockbuster’s retail business remains to be seen, but it’s clear that they’re not the most valuable part of the deal. It’s far more likely that Dish Network will tie in its own satellite television services with Blockbuster streaming packages. For example, new Dish Network customers may see promotions and discounts if they sign up for Blockbuster streaming or disc by mail rentals. By contrast, current Blockbuster subscribers may be prompted to switch to Dish Network for their traditional TV services, if they have them.

Additionally, Blockbuster has made a significant push in recent years towards the mobile space, entering partnerships with a number of smartphone manufacturers and wireless carriers to bundle their streaming video apps on new devices. Dish Network could also leverage those agreements to bring mobile television and streaming video to users much like Comcast does with its Xfinity TV mobile apps without having to build the apps themselves.

Ultimately, Dish Network’s acquisition of Blockbuster – if approved by the federal bankruptcy court handling the deal – could give the company a leg up against competitors like RedBox, which doesn’t have a traditional TV service to fight Dish Network with, and Netflix, which doesn’t offer either traditional TV or kiosks.

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