Looks Like Blockbuster Won’t Get Its Bloody Revenge On Netflix After All

Image courtesy of (MrStinkhead)

When Dish Network swooped in to save Blockbuster Video from death’s chilly grasp, some people thought it was a boneheaded move by a company that was already trying to keep up with bigger competitors. But Dish seemed confident that it could leverage Blockbuster’s name recognition and its video streaming service into something that would crush Netflix into something really small and crushed. But now the Dish founder and chairman is all but admitting that maybe the Blockbuster deal was not perhaps such a wonderful idea.

“You make a lot of mistakes in business,” Charlie Ergen tells Bloomberg. “I don’t think Blockbuster is going to be a mistake, but it’s unclear if that’s going to be a transformative decision.”

Dish had hoped to push a Netflix-killing (or at least competitive) video service that would stream via a branded wireless device that utilized Dish’s existing spectrum. However, regulators apparently did what regulators do best — drag their feet, meaning Dish was stuck with a second-tier streaming service that could not differentiate itself from Netflix.

Dish won’t be left in the red by the acquisition. By closing a bunch of Blockbuster stores (which apparently still exist), it will actually make a profit on the $320 million it spent acquiring the once-great video rental company.

“There was very little risk in buying,” Ergen explains. “Worst case we break even or make a little bit of money.”

So the notion of Blockbuster being revived as a DVD-by-mail or streaming video powerhouse have gone the way of VHS tapes, but Ergen says he still has plans for the brand.

Ergen says that Netflix got the jump on the rest of the industry by making content deals early on with companies who didn’t realize the value in streaming video. What those plans are, he’s not saying at this point.

“Netflix at first paid for 5 million customers and they got 25 million,” he says. “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.”

Which is exactly the sound that Blockbuster made when it went from 9,000 stores to the 900 or so outlets still holding on to their anchor spots at strip malls around the nation.

Blockbuster Hits Rewind on Plan to Return as Netflix Killer [Bloomberg]

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