Dish Buys Blockbuster for $320 Million. Why?

Dish has the brand on life-support. Fast Company offers a few ideas for what to do with the struggling retailer.

Blockbuster lovers everywhere (that's right, both of you) rejoice! Dish Network Corp. today announced that it won an auction for the struggling movie-rental chain, with a $320 million bid. Blockbuster filed for Chapter 11 bankruptcy protection in September, and went on the block in a marathon auction yesterday that ended at 1:25 A.M. in the wee hours this morning, reports the Wall Street Journal.

Of course, someone was going to win that auction. But the fate of Blockbuster truly hung in the balance last night, because some of the bidders probably had plans to simply liquidate the company. Dish has expressed a desire to keep Blockbuster as a "going concern"--that is, to not liquidate it, yet.

What does Blockbuster, whose peak of 9,100 stores in 2004 have since dwindled to about 2,000, have to offer Dish Network, a satellite TV service? A few things. Said Tom Cullen of Dish, "With its more than 1,700 store locations, a highly recognizable brand and multiple methods of delivery, Blockbuster will complement our existing video offerings while presenting cross-marketing and service-extension opportunities for Dish Network." There are various ways to parse this statement, and different analysts are offering different takes. Perhaps Blockbuster's licensing deals with studios are of interest to Dish; perhaps Dish is particularly interested in having a brick-and-mortar presence to promote its service; and so on.

We're in an interesting period, though, in that we know Blockbuster will continue to live on in name, and in some retail presence--yet we don't know exactly what it will be selling. Fast Company therefore has a few suggestions for how Dish might manage its going, and perhaps ongoing, concern...

1. Turn Blockbuster's retail locations into living museums to businesses that failed to innovate.

Something like Colonial Williamsburg (see above), only with 2,000 locations across the country (to really drive home the point), Dish could employee historical re-enacters to re-create the roles of Blockbuster staff people. They would stand behind the counter, stock shelves, and recommend movies, just like Blockbuster employees of yore. Visitors could pay a few dollars for souvenir empty DVD cases.

2. Sell candy. Only candy.

Concession stand sales remain a mainstay of the theater-going business. Blockbuster was already pretty good at selling candy at exorbitant rates. People like candy, and still prefer candy stores to receiving candy in red envelopes.

3. Stage live performances of great films in Blockbuster stores.

Turn each city's Blockbuster into a kitschy destination to see a play version of Star Wars or Jaws. Capture the ironic hipster market, and garner praise in little sidebars of Lonely Planet guide books.

4. Sell literal block-busters.

We're not sure what the utility of them would be, but they're bound to be more useful and competitive than what Blockbuster currently offers. Kindergarteners tired of playing with the same old blocks could break them apart. Such technology might eventually find industrial applications among quarrymen and miners.

Follow Fast Company on Twitter. Email David Zax, the author of this post.

[Images: Flickr user tobyotter]

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11 Comments

  • Monica A

    I work for
    DISH and it looks like they’ve put this recent acquisition to good use. Right
    now they’re using it to offer Blockbuster for free for three months for customers
    who switch to DISH, http://bit.ly/jGJ7jn. I think Charlie was very
    smart to buy Blockbuster and will be using it to offer more to both DISH and
    Blockbuster customers while improving both companies in a variety of ways. I
    can’t wait to see what else comes as a result of this purchase.
     

  • Guts

    Tom's comment regarding innovation is interesting....however Blockbuster isn't exactly known for this. And Dish has been somewhat creative if not aggressive in carving out it's niche (the lower-end priced satellite dish market), they lost a patent infringement suit with TiVO regarding DVR technology in 2006 (no innovation there) and they continue to trail behind other cable and satellite service providers in product quality and innovation. In my view it's just another case of one pseudo-innovative company acquiring another dieing non-innovative company looking to expand their distribution channels. From a core product perspective, not innovative....they may be diversifying their distro network, but that's about it.

  • Guts

    I can empathize with the bully sentiment...but I think folks are missing the point. The name of the site is "Fast Company"; companies need to stay in touch with imagination and innovation...evolve or die. If you create a product who's core revenue stream is a result of human fragility (producing late fees and the addiction to intellectual and physical sweets)...you're not providing much value for your consumer. If the market supports it your consumer will always select the best performing product for the lowest cost...obviously Fast Company celebrates and promotes ideas such as this in many regards. Blockbuster created a new delivery stream for existing content, that was a cutting edge product 25 years ago. They got fat and happy on their golden egg, it's their own fault sites like "Fast Company" publish stories that make fun of their failure to leverage their peak of growth into an ongoing concern.
    This is an old story though, oral storytelling and the written page...tribal living and civilization...the jackass and the corn husking tractor...Glenn Beck and Jon Stewart...the list goes on and on. Blockbuster should lick it's wounds and be thankful that Dish will keep the lights on. And frankly, Dish is vulnerable to the same innovation that felled BBuster. BBuster was a fast company 25 years ago, now they're more akin to Kirsti Alley on Dancing with the Stars...

  • Richard Presley

    I appreciate good satire as much as anyone. This isn't it. Granted, FastCompany has been on Blockbuster's case for a long time now and a mocking tone is pretty much what we've come to expect. Sadly.

    For a change, maybe, could you try objective reporting? These are all fun and everything, but beating up on helpless companies that are getting gobbled up by a cable provider seems more macabre than watching the local playground bully beat up the asthmatic computer nerd and cheering for the bully. Yes, I read the whole article, so you achieved your purpose, David. But let me take this opportunity to apologize for doing so.

  • Anna Siradze

    This article is hilarious. As soon as Netflix and RedBox came out...it was pretty clear that Blockbuster's overhead costs would be like a ball and chain around a swimmer's ankle.

  • Logan J Vickery

    I was really excited about Movie Cube / Red Box when it first came out due it the price and convience - even more so than movies by mail, but now I use Blockbuster Express because they are more convenient and might even have better selection. I think they are doing a great job there.

    This article blows.

  • Tom Le Bree

    The price seems high, but there is clearly a lot of brand equity in Blockbuster, that could potentially be exploited.

    For example, outside of the USA, Blockbuster is far more well known for home film than almost anyone, else. Many stores are still operating in the UK.

    So, imagine they offered a Netflix style streaming service - given their existing customer database, payment infrastructure, and provenance in providing home film they could be a serious player.

    Hence, I have to agree with the @AB and @Cash - the mocking tone wasn't needed. Given the strength of their brand, there is still room for them to innovate.

  • A B

    Yeah what's with the mocking tone on an issue that isn't particularly funny? It's pretty distasteful

  • Cash

    I'm not quite sure I understand Fastcompany's hatred of blockbuster with all the negative articles over the past year in addition to this one. Why on earth would you mock the survival of thousands of jobs in addition to keeping competitive landscape in the realm of digital streaming?? More options for the consumer is better all around for innovation and keeping prices in check. I'm starting to wonder if you recently bought Netflix stock in the past year.... (which would make me laugh seeing as Netflix has one of the most out wack valuations currently in the market... Although it would bring some logic to your negativity).