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Dish Network goes after Netflix

The satellite TV provider will launch Blockbuster Movie Pass, a subscription service offering DVDs and video games by mail, plus titles for streaming. The price? What Netflix used to charge for both.

September 24, 2011|By Ben Fritz, Los Angeles Times
  • Ryan Winn assembles a Dish Network satellite dish before installing it at a home in Chicago. In October, the company will launch a DVD-by-mail and Internet streaming service using its newly acquired Blockbuster unit.
Ryan Winn assembles a Dish Network satellite dish before installing it… (Scott Olson, Getty Images )

Dish Network is aiming to use its new Blockbuster unit to challenge now vulnerable Netflix, but not at the expense of its own satellite television business.

The company on Friday unveiled Blockbuster Movie Pass, a service that offers DVDs and video games by mail along with 3,000 movies and television shows available to stream on TV and an additional 1,000 for PCs. It will launch Oct. 1.

The service will cost $10 a month, the same price Netflix charged for a combined streaming and DVD service before it unexpectedly raised the price in July, sparking public outrage and the loss of an estimated 400,000 subscribers by the end of September.

"We're looking to get customers from Amazon, from Hulu, from Netflix and from Qwikster," said Dish Chief Executive Joe Clayton, referring to the three big players in subscription video on demand and Netflix's newly branded DVD-by-mail service.

Because the new offering is available only to people who subscribe to Dish for at least $39.99 a month, it may not appeal to those who are currently happy with their cable or DirecTV services or already use Netflix alone. Clayton said he hoped it would draw some existing Dish customers who already use other movie services, as well as people who pay for TV from another provider.

To entice new Dish subscribers, the Blockbuster Movie Pass will be free to them for the first year.

Dish Network, which has 14 million subscribers, acquired Blockbuster for $320 million in April at a Bankruptcy Court auction.

Michael Kelly, the president of Blockbuster, said the company would also announce plans for a stand-alone subscription service that targets people who don't subscribe to TV channels from Dish.

"We think this is a powerful offering to the great deal of the population that uses pay TV, but it's a first step," he said. Acquiring movies and TV shows for such a service is costly, as Netflix investors have learned. But because Blockbuster Movie Pass is tied to a Dish subscription, the company can offer content to which it already has the rights through program deals for its satellite TV business.

Netflix currently offers more than 12,000 movies and TV shows for its streaming subscribers, according to the website InstantWatcher.com, significantly more than Dish has. Netflix also has signed some exclusive agreements for TV series such as "Mad Men" and movies from independent studios such as Relativity Media.

But Blockbuster Movie Pass will have a key advantage: Walt Disney Studios and Sony Pictures movies from Starz, which recently announced it would end its Netflix agreement when it expires in February.

Blockbuster's TV shows will be supplied from networks including Fox, A&E, TNT and AMC.

In addition to DVDs, Blu-ray discs and video games through the mail, subscribers will be able to swap discs at the more than 1,500 Blockbuster stores still operating in the U.S.

Investors seemed to like the news, with Dish Network's stock price rising 5% on Friday to close at $26.71. Netflix shares were up 1% at $129.60, but are down 38% since the subscriber losses were disclosed Sept. 15.

ben.fritz@latimes.com

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