3 Reasons for Netflix to Worry About Blockbuster

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In a move that is long overdue -- like returning that Blockbuster copy of Turner & Hooch that mistakenly sat as a beer coaster for a couple of weeks a few years ago -- DISH Network's (Nasdaq: DISH  ) Blockbuster is finally beefing up its streaming offering.

The "stream come true" press event that Blockbuster has scheduled for later today hints a Netflix-like service at a time when Netflix (Nasdaq: NFLX  ) can't afford to ignore the challenge.

Let's go over a few of the reasons to pay attention.

1. Blockbuster jokes aren't funny anymore
As far as brand names go, Blockbuster has been the butt of couch potato jokes over the past decade. However, I think Netflix has been more lampooned and publicly dissed these past few weeks than Blockbuster has been razzed in several years.

In other words, Netflix shareholders can't dismiss the potential of a Blockbuster streaming smorgasbord because of how uncool it is while it's wearing a "kick me" sign on its wedgied back.

2. Blockbuster now has streaming and premium video on demand
Netflix will eventually realize that it will need to serve up fresher content to its subscribers, especially now that new DVD releases will be going out through a separate Qwikster (insert your own Qwikster joke here to prove my first point) website. Blockbuster has been serving up piecemeal rentals for a few years now.

In other words, Blockbuster has beaten Netflix to the punch when it comes to being a one-stop shop of digital video entertainment. It's Netflix circa 2004.

3. Disgruntled Netflix subscribers are exploring alternatives
Frustrated Netflix users would shake their fists in the air in the past -- and little else. Where were they going to go? No one was doing what Netflix was doing. Well, times have changed. (Nasdaq: AMZN  ) is now up to 8,000 titles through its unlimited streaming offering. Coinstar's (Nasdaq: CSTR  ) Redbox has been teasing the market about a digital strategy for more than a year.

If Blockbuster is serious about mattering, a suddenly vulnerable Netflix needs to take this threat seriously.

If you want to see what happens next, consider adding Netflix and DISH Network to My Watchlist.

Motley Fool newsletter services have recommended buying shares of and Netflix. Motley Fool newsletter services have recommended creating a bear put spread position in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story except for Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Read/Post Comments (2) | Recommend This Article (2)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 23, 2011, at 8:08 PM, iamnik77 wrote:

    As a consumer I want a movie streaming service that offers it all: unlimited streaming from a vast library of older titles for a low monthly charge of $10 or so and newer titles that I could pay a market rate of $4 or $5 to "pay per view" on an individual basis. I would find such a service very appealing. This would be a complete improvement over last generation's business model, aka Blockbuster. Waiting for movies to come in the mail is for the birds and I'm glad Netflix is trying to move away from that.

  • Report this Comment On November 22, 2011, at 9:20 AM, AndrewKAnderson wrote:

    I actually had Netflix for about the last year but after that whole Qwikster, splitting services fiasco, along with the price hike, I finally had enough and decided to call it quits with Netflix. Then after getting the Blockbuster Movie Pass and hearing that Netflix is losing a lot of their content, I knew I made the right choice. I was thankful for the timing of the Blockbuster Movie Pass though, even though I’m both a subscriber and employee of DISH Network, I did rather enjoy having the extra options Netflix provided. But with Blockbuster having instant streaming, 20 movie channels, movies and games by mail, and having it all on a single bill, it’s even better. The games are a huge selling point for me, because not only was I able to replace Netflix, but also Gamefly, saving me even more money. I highly recommend checking it out.

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