Dish Plans to Take on Netflix with Blockbuster Streaming Offering
Source: Blockbuster's Official Website
Dish Network (NASDAQ:DISH) will introduce Blockbuster’s streaming movie service next month according to a Bloomberg report. Interestingly, this move coincides with Netflix’s (NASDAQ:NFLX) price increases and comes after Starz’s recent decision to not renew its content deal with Netflix. Dish Network is likely to keep pricing competitive to attract some Netflix customers wanting to explore their options. However the extent of the impact on Netflix will be determined by the quality and quantity of content that Blockbuster can offer through Dish, which is unknown at this point. Nevertheless, a good streaming service from Dish may change the way subscribers and investors look at the company.
We estimate that Blockbuster & equipment sales business constitutes about 10% to Dish Network’s stock, with Blockbuster accounting for most of this.
Our price estimate for Dish Network stands at $29, a premium of about 20% to the market price.
- With Echostar Merger Approaching, What To Expect From Dish’s Q3 Results?
- Can Dish Network Stock Return To Its Pre-Inflation Shock Highs?
- Dish Stock Has Big Upside Potential To Its Pre-Inflation Peak
- How Will The Cyber Attack Impact Dish’s Q1 Results?
- Is Dish Network Stock A Buy Despite Many Headwinds?
- Will Dish Network Stock Continue To Underperform?
The New Dish
Dish is transforming into a different and more ambitious company which is something that rival DirecTV (NASDAQ:DTV) as well as other pay-TV companies are closely watching. With plans to introduce a mobile broadband network and potentially revive Blockbuster, Dish wants to assert that the company has long-term plans to create value for shareholders.
We wrote in the past that Dish was struggling with competition. Our previous thesis revolved around the possibility of negative subscriber trends due to price hikes that would increase subscriber churn and consequently net additions. However, Dish Network’s Q2 results showed that subscriber churn was in line with expectations despite price hikes. Nonetheless the company still lost around 135,000 subscribers in the last quarter pointing to larger gross subscriber losses, which the company blamed on a weak economy and aggressive upfront programming discounts by its competitors.
Turn Around in Store for Rest of 2011?
Despite these setbacks, Dish plans to make a push in the second half of 2011. Overall we expect Dish to lose some market share in 2011; however, the company has taken steps to address recent issues. Dish plans to spend more on marketing in the remaining part of the year and has entered a multi-year partnership with Frontier Communications to market its services to Frontier’s subscribers.
The streaming Blockbuster offering promises to add some fresh life the company as it looks to tap into the growing demand for streaming services that has carried Netflix while providing additional options for subscribers in an effort to reverse recent subscriber losses.
See our recent notes on Dish and Netflix Blockbuster Can Help Revive Demand for Dish and Netflix & Starz’s Breakup Highlights the Rising Costs of Netflix’s Growth.