Dish and Blockbuster to offer new service to challenge Netflix

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Seeking to challenge Netflix without undermining its own satellite television business, Dish Network has launched a new service, available only to its television subscribers, that will stream movies and TV and send DVDs by mail under its newly acquired Blockbuster unit.

Called ‘Blockbuster Movie Pass,’ the service includes 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 computer. It will launch Oct. 1.

The offering costs $10 per month, the same price that Netflix previously charged for a combined streaming and DVD service before it unexpectedly raised the price in July, leading to a public outrage and the loss of an expected 400,000 subscribers by the end of September.

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

Because the new offering is only available to people who subscribe to Dish for at least $39.99 per month, its appeal may be low to those who are currently happy with their cable or DirecTV services or already use Netflix alone.

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

At a news conference held in San Francisco, Blockbuster President Michael Kelly said the company is working on a similar subscription offering for non-Dish subscribers that will launch in the future.

Acquiring movies and TV shows for such a service is costly, however, 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 to through program deals for its satellite TV business.

Netflix currently offers more than 12,000 movies and TV shows for its streaming subscribers, significantly more than Dish has. It also has signed some exclusive agreements for series like ‘Mad Men’ and movies from independent studios including Relativity Media.

But Blockbuster Movie Pass will have a key advantage: Walt Disney Studios and Sony Pictures movies from Starz, which recently announced it will end its Netflix agreement when it expires in February. The Dish-Blockbuster offering will also have Paramount Pictures, Lionsgate, and Metro-Goldwyn-Mayer films from those studios’ pay channel Epix, which also provides content to Netflix.

Blockbuster’s television shows will come from networks including Fox, A&E, TNT and AMC.

In addition to getting 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.

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-- Ben Fritz