In a move that seemed inevitable years ago, DISH Network (DISH) is closing the remaining 300 Blockbuster video rental stores in this country. It will also be shutting down its DVD rentals-by-mail offering later this year.
DISH seemed to have scored a bargain when it acquired Blockbuster for little more than its liquidation value two years ago. However, outside of using the stores as a focal point to push DISH satellite television subscriptions, there is little that the buyer did to improve the chain's chances against the nimble Netflix (NFLX -8.19%), and cheap Redbox.
To be fair, it's not as if Netflix has exactly torn it up in the realm of optical disc rentals. Its base of DVD and Blu-ray viewers has been shaved by more than half in that time. Netflix's focus has been on its streaming service, where it now watches over more than 40 million accounts worldwide.
Outewall's (OUTR) Redbox has been able to grow its fleet of disc-spewing vending machines, and it remains the only major player still growing in this otherwise dying niche. Redbox machines offered up a record 199.5 million rentals in its latest quarter. The average kiosk experienced a 2% uptick in revenue, but one would think that it should be greater than that, as Blockbuster's been closing stores at a feverish pace, and Netflix is no longer actively promoting its disc-based platform.
DISH isn't giving up on Blockbuster completely. It will naturally keep the brand, and see if it can strengthen its digital offerings. Blockbuster @Home -- the multichannel online service it offers DISH customers -- isn't going away. DISH is also going to keep its Blockbuster On Demand transactional streaming service open to the general market.
If DISH was serious about offering up more resources to improve the visibility of its remaining Web-tethered properties, one would think that this could pose a threat to Netflix, and even Netflix's fledgling streaming service. However, the Blockbuster brand may be more of an old-school liability than a new-media asset.
Netflix doesn't have to worry about Blockbuster. It hasn't had to worry about Blockbuster for years. Outerwall has even less to worry about. If anything, there's actually an opportunity for both companies to fill the void that the shuttered video stores will leave behind.
