Dish Bolts On Blockbuster Hybrid DVD, Streaming Service

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Dish Network is angling to shore up its declining subscriber base -- and poach disgruntled Netflix subscribers -- with Blockbuster Movie Pass, a hybrid DVD-by-mail and streaming service starting at $10 extra per month.

Initially, Dish will offer the Internet-video service only to its satellite TV customers. Non-Dish subs will be able to sign up for Blockbuster service soon, executives said.

The Blockbuster Movie Pass service, available starting Oct. 1, will include: 100,000-plus movies, TV shows and videogames available by mail; 3,000 movies available on the TV; and more than 4,000 movies streamed to PCs.

"We're totally focused on the needs of the consumer and the vulnerabilities of our competitors," said Dish CEO Joe Clayton at a press conference in San Francisco last Friday.

Joe Clayton

Movies to be available for streaming instantly to the TV through Blockbuster Movie Pass include Alice in Wonderland, Hot Tub Time Machine, Iron Man 2, Shutter Island and The Expendables.

As for the disparity between the TV and online-streaming titles, a Dish spokesman said, "With studio rights, there are more titles available through than on TV."

According to Dish, the Blockbuster Movie Pass subscription also includes access to "more than 20 premium entertainment movie channels" including those from Starz, MGM, Epix and Sony Movie Channel.

Dish bought Blockbuster's assets for $234 million in a bankruptcy auction. The move prompted Wall Street analysts to speculate that Dish chairman Charlie Ergen would try to create a rival to Netflix.

Asked about the timing of the launch, given Netflix's marketing tribulations, Clayton commented, "There's an old expression: ‘No amount of planning can displace good old luck.' We'll take luck, too."

From Oct. 1 through Jan. 31, 2012, Dish is offering new customers Blockbuster Movie Pass for no extra charge for one year when they subscribe to the America's Top 200 package or higher with a two-year contract. The service also is included free for three months for new subs who take the America's Top 120 tier.

After the promotional period, Blockbuster Movie Pass starts at just $10 per month for one DVD out at a time ($15 for two DVDs and $20 for three).

However, with only about 3,000 or 4,000 titles available to stream, Dish and Blockbuster have a long way to go before they have a viable standalone over-the-top service.

Dish has between 5 million and 6 million customers with IP-enabled set-tops that can receive the instant-streaming movies, Clayton said. Access to the subscription streaming movie service requires a Dish HD DVR.

Blockbuster president Michael Kelly noted the company has signed up 500,000 DVD-by-mail customers in the last 30 days. In July, Blockbuster launched a counter-marketing effort after Netflix's announcement it would discontinue bundled DVD-plus-streaming plans. Blockbuster's DVD-by-mail service is still more expensive than Netflix's non-Blu-ray DVD plans, but the Blockbuster service provides unlimited exchanges at retail stores.

"We think the ideal product right now is the integrated product," Dish chief marketing officer Ira Bahr said. "What we think is happening in this marketplace is, consumers are looking for a better value for their entertainment."

More than 100 million U.S. residents live near Blockbuster's 1,500 remaining domestic stores, according to Dish.

The satellite operator has been promoting Dish service in about 150 Blockbuster stores, Clayton said.

Bahr emphasized that Blockbuster Movie Pass was not a replacement for pay-TV service. Consumers "still need their SpongeBob SquarePants; they still need their Fox News," he said.