News Analysis
Beat Netflix? No, Dish Network
Blew It!
By Swanni
Washington, D.C. (October 17,
2011) -- Dish Network CEO Charlie
Ergen is known for making bold movies in times of opportunity.
Just ask rival DIRECTV, which has had to counter Ergen's
mischievous marketing moves over the years.
So when Dish announced last month that it would unveil a new
video rental plan for Blockbiuster, just a week after Netflix
made two major strategic blunders, many industry observers
expected to see the launch of a serious rival to the industry's
leading online video rental service.
Netflix subscribers who were unhappy with the company's decision
to change its pricing structure, which essentially doubled your
monthly fee if you rented discs and watched streaming, were also
anxious to hear about an alternative.
But it didn't happen.
Dish Network, which purchased Blockbuster in a bankruptcy
auction earlier this year, announced that it was indeed offering
a new plan, but it would require a subscription to....Dish
Network.
So instead of unveiling a new Blockbuster service that would
undercut Netflix's new pricing structure, Dish was requiring
disaffected Netflix subscribers to pay even more for an
alternative service. New Dish customers would get the
Blockbuster service for free for a year, but they would have to
sign up for Dish's America Top 200 package for $39.99. (Current
Dish subs can get Blockbuster for an extra $10.)
Subscribing to Netflix for under $20 (discs and streaming
combined) suddenly didn't look so bad.
Perhaps realizing that it dodged a bullet, Netflix has since
moved to restore faith with its customers. The company announced
that it wouldn't split the company in two after all; if you rent
discs and watch streaming videos, you can still do it on one
Netflix site. And while Netflix hasn't budged yet on its new
pricing structure, one can argue that Dish and Blockbuster
didn't give it a compelling need to do so.
The media, which a month ago were writing stories suggesting
Netflix could be in trouble, have tempered their criticism of
the company in the last few weeks. It's no longer vogue to say
that Netflix could be on the road to ruin.
Now some say that Dish didn't announce a serious rival to
Netflix at the September 23 press conference for one reason: The
company was trying to buy program streamer Hulu in an auction;
with Hulu's vast library of shows and movies, Blockbuster's
streaming service would be a serious competitor to Netflix's
streaming service. Maybe Dish wanted to buy Hulu first before
announcing a direct competitive service.
But last week, Hulu's owners announced that it wasn't selling
the company after all. So, no Hulu for Dish.
Which tells me one thing: Dish blew it. Sure, it can still
launch a direct rival to Netflix, free of any ties to a Dish
Network subscription. But the opportune time has passed. Netflix
is no longer on the ropes. Subscribers are getting time to get
used to the new pricing structure.
