Dish wins Blockbuster auction: Congratulations or condolences?

Early this morning, satellite service Dish Network won the auction for the Blockbuster movie-rental chain's assets with a bid of approximately $320 million. What happens next with Blockbuster, currently in bankruptcy, isn't exactly clear.

In a prepared statement, a Dish executive acknowledged that Blockbuster faces "significant challenges" but said the chain's 1,700 retail stores, well-known brand, and multi-format delivery options "will complement our existing video offerings while presenting cross-marketing and service-extension opportunities for Dish Network."

The deal has to get approval from the bankruptcy court before it can be finalized; a hearing is scheduled for tomorrow.

While other bidders had considered liquidating the company and shuttering its remaining stores, it appears that Dish intends to keep Blockbuster as an ongoing concern. One thought is that it will use Blockbuster stores to sell Dish's TV services. Another is that it intends to use Blockbuster's On Demand video service to supplement Dish's pay-per-view and video-on-demand offerings. The deal also gives the company inroads into a number of home electronic devices, including TVs and Blu-ray players, mobile phones, and computers, that offer the Blockbuster On Demand service.

Another possible asset: Blockbuster's relationships with the major Hollywood studios. In the past, Blockbuster has been able to negotiate deals with some studios that provided it with access to big movies a full month before they were available via Netflix or CoinStar's Redbox kiosks.

But Dish's acquisition of Blockbuster comes as the viability of retail video stores is clearly being challenged. On one hand, retail stores are being squeezed by physical DVD suppliers such as Netflix's mail-order business and Redbox kiosks, and on the other by the growing number of on-demand services from companies including Amazon, Netflix, and Vudu, as well as satellite and cable operators.

At its height, Blockbuster had more than 9,100 retail locations, but by the end of this month it will have about 1,700 locations. And it's likely that Dish will close additional underperforming stores.

How do you feel about Blockbuster as an ongoing entity? If there's one still nearby, do you ever rent movies from it? Do you still rent DVDs and Blu-rays from Netflix, or do you now rely on on-demand movies from your TV service provider, or use one of the devices in your home to stream movies from services such as Netflix, Amazon or Vudu? Let us know.

—James K. Willcox