“I firmly believe that if our online strategy had not been essentially abandoned, Blockbuster Online would have 10 million subscribers today,” Antioco said, “and we’d be rivaling Netflix for the leadership position in the Internet downloading business.”
Blockbuster has licensing deals with 20th Century Fox, Lionsgate, MGM, Sony Pictures and Universal. Films from those Hollywood studios can stream to Blockbuster customers on smartphones, tablets, laptops and televisions.
“Dish’s move to buy Blockbuster is super-smart because it’s all about getting those licenses for content,” said Markham Erickson, a tech industry lobbyist for the law firm Holch & Erickson. “Dish is a company that realizes you can’t stop moving or you’ll be passed.”
Of course, Dish is in a footrace with Netflix, Hulu and YouTube to get into American homes. And Netflix, for one, seems a step ahead.
The network effects of Netflix’s success may be one of the biggest challenges for any serious competitor. The more customers the company gains, the more influence it has over the industry and the more relevant its service, a perfect business swirl that keeps leaders out front, particularly in the tech industry.
It explains Facebook’s success, for instance. You wouldn’t want to be off on some other social network when all your friends are yukking it up on Facebook.
Others discount the notion. Internet users are fickle, analysts say. They are one click away from using new services. Netflix has more than 20 million subscribers, but with 120 million homes in the United States, the opportunity is ripe to attract customers who will choose more than one Internet service for entertainment.
The payoff to Dish’s gamble, in other words, could be substantial. Ergen, a straight-shooting Tennessee native, has been candid about the prospects of his industry.
“I worry about what we’re going to look like five years from now and not what we’re going to look like five quarters from now,” Ergen said in an earnings call with analysts in February. “Our industry is changing . . . so we have to be ready to adapt to that. And sometimes I’d rather be on the early end of trying to adapt than the back end.”
Dish is making key moves even as the communications industry reboots. As consumers go online for entertainment and news, companies are scrambling to change and break into new businesses. The cable firm Cox recently added wireless services, and Comcast is making itself over into a media giant by buying NBC Universal’s networks and a movie studio. Verizon bundles wireless, phone, television and broadband to more and more American homes.
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