Blockbuster Hits Rewind on Plan to Return as Netflix Killer - High-Def Digest Forums
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Old 10-05-2012, 09:47 PM
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Default Blockbuster Hits Rewind on Plan to Return as Netflix Killer

Dish has begun the process of closing stores that no longer make strategic sense, a plan that will allow Dish to turn a profit on the $320 million acquisition, Ergen said. Some Blockbuster DVD-rental stores can still make money in rural regions, he said. About 900 U.S. stores remained as of August, a fraction of the thousands Blockbuster once operated.
Article has a few interesting things that Dish was trying to do with blockbuster but petered out. Notably:

Dish also considered a deal with Coinstar Inc. (CSTR)’s Redbox, allowing customers to rent a movie from a Redbox kiosk and return it to a Blockbuster store, Ergen said. Those plans deteriorated when Verizon Communications Inc. (VZ) announced its partnership with Coinstar earlier this year.
Dish planned to entice consumers to buy its wireless services by streaming Blockbuster movies on mobile devices. Without the wireless network, a nationwide streaming service would function a lot like Netflix, except Blockbuster would be starting from scratch against a big incumbent, Ergen said. Netflix has 24 million U.S. streaming-video customers.

Content providers have caught on to Netflix’s business model, Ergen said, after years of struggling to figure it out. Netflix pays a flat fee for the rights to stream library content. When the Los Gatos, California-company was growing rapidly, Netflix was profitable because the company would pay a fee based on the customers it had at the time, then make money by recruiting millions more customers, Ergen said.

“Netflix at first paid for 5 million customers and they got 25 million,” Ergen said. “But now people are saying, ‘OK, you’re going to get 30 million customers, so you’re going to pay for 30.’ If Netflix can get 40 or 50 million, they’ll be fine. But if they don’t get to 30, they’re probably going to go pfft.”

Netflix shares have fallen 44 percent in the past 12 months. Analysts predict Netflix will lose money this quarter and next, according to data compiled by Bloomberg.
Joris Evers, a Netflix spokesman, declined to comment.

Dish no longer has plans to use Blockbuster as a nationwide video streaming or DVD-by-mail service, Ergen said.
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