September 24, 2011 in Business

Blockbuster targets upset Netflix crowd

Offer seeks to take advantage of competitor’s price increase
 

SAN FRANCISCO – The Blockbuster video store chain is seeking some revenge against old nemesis Netflix by offering a less expensive way to watch videos online and rent DVDs through the mail.

The attack announced Friday is being mounted by satellite-TV provider Dish Network, which bought Blockbuster out of bankruptcy court for $234 million five months ago.

Blockbuster, once the video rental king, had filed for bankruptcy when it couldn’t counter the threat posed by Netflix Inc., whose DVD-by-mail service and subsequent expansion into Internet video streaming revolutionized home entertainment.

Netflix now reigns as the largest U.S. video subscription service with about 24 million customers, but it’s in a weakened position after raising prices as much as 60 percent and announcing the spinoff of its DVD-by-mail service as Qwikster. Those moves, made in the past two months, have triggered a Netflix customer rebellion that Blockbuster and Dish Network Corp. are preying upon.

The lure: a DVD-by-mail and Internet video package that Blockbuster and Dish Network are selling for as low as $10 per month. That’s the same price Netflix charged until it split its streaming service from DVDs.

But there’s a big catch. To get Blockbuster’s new Movie Pass, you have to subscribe to Dish Network’s pay-TV service. Dish Network currently has about 14 million subscribers, but only half have the right set-top box to stream video, said Ira Bahr, the company’s chief marketing officer.

In an attempt to widen its audience, Dish Network is dangling a one-year offer for $40 a month that will include more than 200 TV channels and the Blockbuster Movie Pass. The company eventually plans to offer Movie Pass to non-Dish subscribers.

Movie Pass will roll out to Dish subscribers Oct. 1, with a marketing blitz.

It appears to be an ideal time to introduce the service because so many Netflix customers have been canceling their subscriptions and exploring other options.


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