DISH Network Corp. (DISH) is gradually transforming itself from a satellite pay-TV operator to a converged multichannel entertainment service provider for various platforms. Recently, the company announced its Blockbuster Movie Pass service, the first concrete step with its newly acquired bankrupt movie chain and video game retailer Blockbuster Inc. With this announcement, DISH Network entered into next-generation online video streaming services, head-on with Netflix Inc. (NFLX), YouTube, and Hulu.
Blockbuster Movie Pass will enable DISH Network’s existing subscribers to stream movies on TV and PCs, to get movie DVDs and video games by mail, and to watch several premium TV channels, by paying just $10 extra per month. New subscribers will enjoy Blockbuster Movie Pass service absolutely free for one year if they subscribe to DISH Network's America's Top 200 programming package or greater and enter a 2-year DISH Network service. Blockbuster Movie Pass will start from October 1, 2011.
We believe offering online streaming movie services will play a major role to consolidate DISH Network’s sagging pay-TV subscriber base. In the previous quarter, DISH Network lost an enormous 135,000 net subscribers compared with a net loss of a mere 19,000 subscribers in the prior-year quarter. DISH Networkblamed lack of gross subscriber addition (down 23.4% year over year) as the primary reason for this huge net subscriber loss. Management cited aggressive marketing promotion and increased level of discounts offered by the company’s competitors are the other main reasons for this massive net subscriber loss.
The Blockbuster Movie Pass not only place DISH Network at par with Netflix, Hulu, or YouTube, it will also help DISH Network to significantly differentiate its offerings from large pay-TV competitors in the industry, such as Comcast Corp. (CMCSA), Time Warner Cable Inc. (TWC), and Verizon Communications Inc. (VZ). The video-on-demand service of DISH Network includes powerfull Blockbuster contents, where subscribers will have access to video games and can rent DVD from Blockbuster retail stores.
DISH Network already stated that in future it will offer subscription streaming package also to non-DISH subscriber. We believe the company is undergoing a process to deploy a viable pay-TV distribution network. In August 2011, DISH Network applied for FCC approval to install a high-speed wireless broadband network to offer mobile Internet services to its customers. It is not clear whether the company will deploy its own wireless network or will partner with some established wireless operator, management just hinted that the company may offer mobile broadband services from 2014. The company can combine Blockbuster’s movie streaming services through its wireless broadband network to offer a highy innovative bundled service.
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