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Charlie Ergen: Dish Bought Blockbuster to Open Wireless Stores

12 Feb, 2013 By: Erik Gruenwedel

When Dish Network acquired Blockbuster out of bankruptcy in 2010, its goal was to establish a long-term retail footprint when rolling out wireless devices and a network, founder and chairman Charlie Ergen told a media group.

In a rare conference appearance Feb. 12 at D: Dive Into Media in Laguna Beach, Calif., Ergen said regulatory delays regarding wireless spectrum and other issues pre-empted the strategy, which included rolling out a subscription video-on-demand service aimed to rival Netflix.

“The [Blockbuster store] real estate was really good for us to get into the wireless business,” Ergen said. “Half the store would be wireless and half the store would be TV and whatever else we were going to put in. Because we got delayed, it hasn’t exactly worked out the way we planned.”

Ergen said Dish/Blockbuster — notably Blockbuster @Home, which includes streaming access to 3,000 movies — was too late an entrant into the SVOD market. He said Dish didn’t have “the guts” to buy content and start a SVOD service from scratch.

Still, he believes there is enough room in the SVOD market for both Netflix and Amazon Prime Instant Video to co-exist.

“Netflix did a really smart thing,” he said. “They got critical mass and can buy pretty much any type of program they want.”

Ergen believes Netflix will be successful following a strategy he said appears to be putting all of its eggs into streaming. The executive said Netflix has withstood outside pressures thus far, including internal missteps, that when it gets to 35 million to 40 million subscribers, it reaches a user base that content holder can’t ignore.

“People have to sell to them,” Ergen said.

He called Netflix’s recent original series, “House of Cards,” whereby subs can watch all 13 episodes at once without commercials, a “really brilliant” move.

“I feel stupid that we didn’t think of it first, but I’m a fan,” Ergen said. “They will ultimately change the way people watch TV. And I don’t want to be Western Union. And I don’t want to be the Postal Service.”

In the Q&A session, Ergen was asked why cable and satellite-TV operators don’t offer subscribers the option to automatically record all primetime content that would be stored on the DVR box and played back on-demand.

He said Dish’s Hopper with Sling DVR could be programed to do that, and represents an option Dish would consider going forward. Currently, a Dish subscriber has to manually program the Hopper to record a select TV program — similar to most DVRs.

“We could do that. It’s not a bad idea,” Ergen said.

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