Blockbuster adds to Dish Network growth, but retail stores are headed for death

Satellite television provider Dish Network has Blockbuster to thank for ending a nearly two-year drought of new subscribers, according to the company’s fourth quarter earnings report.

Dish beat analysts’ estimates by adding 22,000 new subscribers and boosting earnings to $313 million, compared to $252 million during the same period a year ago. The company’s revenue also increased to $3.63 billion or 13 percent compared to last year.

Dish purchased the ailing, bankrupt video rental company for $228 million back in April with the intent of integrating Blockbuster’s streaming and DVD-by-mail service into its television subscription business. Dish customers get a free three-month trial of the Blockbuster service, which allows them access to over 100,000 streaming videos and one physical disc rental at a time. After that it’s $10 per month added to the existing television service bill.

And while the recent quarterly earnings show the success of this strategy, Dish executives told investors it’s planning to close a third of Blockbuster’s brick-and-mortar retail store locations when their leases expire later this year. The news isn’t exactly surprising as retail stores don’t fit into Dish’s business strategy and face increased competition from RedBox’s DVD and Blu-ray rental kiosks.

Other traditional television providers are increasingly taking notice of how streaming video services are impacting their customer growth. Earlier this week, Comcast announced its own streaming video service Streampix that will be exclusively available to existing subscribers (in some cases for free). But without the well known branding that Dish’s Blockbuster service has, its uncertain if Streampix will deliver the same kind of results for Comcast.

Dish executives also discussed the company’s plans to enter the wireless internet market as a way to further diversify the business and grow revenue.  Last year, Dish made a bid to acquire wireless spectrum company TerreStar for $1.4 billion. However, the deal is still awaiting approval by the Federal Communication Commission, which should reach a verdict by March 12. Dish Chairman Charlie Ergen said the company predicts an 80 percent chance of succeeding in the wireless space if the FCC approves the deal.

Photo via trebomb