Look Out, Netflix -- Dish Wants to Crush You (Eventually)
Earlier this year, some wondered why Dish Network bought Blockbuster. But if you thought about it at the time, it seemed obvious: the company was buying its own version of Netflix (NFLX). And that's basically what Dish announced today.
Starting October, for $10 a month, Dish customers can add streaming movies and DVD programming and game rentals. And just to rub it in, during the webcast press conference, Dish demonstrated a streamed movie from Starz -- a source that just walked away from Netflix.
Although initially only available for Dish subscribers, Blockbuster president Michael Kelly hinted at one point during the announcement that the company will eventually open up the service to everyone. That would basically compete head-to-head with Netflix, and might prove a particularly dangerous rival.
Although Blockbuster fumbled its initial run against Netflix, it did at least have the inventory of DVDs, relationships with studios, and infrastructure necessary to handle DVD rentals via store, kiosk, or mail. That potentially meant a much more flexible choice for consumers.
But at a $10 a month price with unlimited in-store exchanges, Dish could significantly undercut Netflix's prices, which just saw a 60 percent hike. The satellite company also claims an inventory of DVDs and streaming programs that, it says, rivals that of Netflix (click to enlarge):
Dish has one more advantage: It was roughly six times the size of Netflix at the end of 2010, and that didn't include revenue from Blockbuster. Last quarter, its net income was almost five times as large. Dish has lots more money available to invest -- or even to subsidize the streaming and DVD business. It could continue to offer that $10 price that customers want, or even raise it a dollar or two for non-subscribers, and still charge less.
If Dish plays its cards right, this is going to get really painful for Netflix.
Related:
- Turns Out Netflix Blew the Qwikster Name Pick -- Out of Fear
- Netflix: Qwik, Let's Dump All the DVDs and Tick Off the Customers
- Why Wall Street Is Wrong About Netflix
- Microsoft and Sony Were Right: Game Consoles Are the Future of Entertainment
- Hulu Starts to Kick Its TV Studio Dependence
- Netflix Earnings: Taking on Cable Costs a Whole Lot
- Thanks to Hollywood, Netflix Is Pricing Itself Out of a Business
- Dish Buys Blockbuster -- and Huge Leverage with the Studios
Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.
Twitter FacebookDisclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
