retail news in context, analysis with attitude

The Los Angeles Times has an interesting piece about Dish Network, which recently raised eyebrows when it spent $320 million to acquire the brick-and-mortar assets of the bankrupt Blockbuster chain.

The story motes that it seemed “like an odd strategy for a company in a mature business with limited growth to buy another with even dimmer prospects.” However, the acquisition and an ongoing $3 billion “spending spree for broadband spectrum, are part of Dish's ambitious plans to turn the company from a pay-television service with about 14 million subscribers into a competitor of Netflix Inc. and a player in wireless communications.” The goal is to develop a strategy that is appropriate for an era “when the pay-television business faces mounting challenges, as consumers increasingly turn to the Internet or services such as Netflix to watch their favorite shows rather than paying for cable or satellite service.”

"We are putting together the building blocks to be able to provide a whole suite of services to the customer," says Dish president/CEO Joe Clayton. "Wireless voice, broadband, video, mobile … we're going to have the capability to do all of the above."

As for the 1,500 Blockbuster stores that Dish plans to keep open, the Times writes that “Clayton is not deluding himself that the traditional DVD rental market is going to make a comeback. He sees the stores as not only DVD rental and sales outlets but also as a promotional platform for Dish and the Blockbuster streaming service, as well as whatever wireless business the company pursues. He doesn't rule out selling consumer electronics at the chain either, an approach known as a store within a store that has proved successful for RadioShack Corp.”
KC's View:
If Blockbuster could be accused of anything, it was not recognizing the way the world is changing and adjusting to it. I have no idea if the Dish strategy will work, and whether it can become a legitimate competitor to the likes of Netflix, Amazon and Apple. But the broad approach certainly seems to recognize reality ... which is the first step in the right direction.