Blog Post

Dish’s First Blockbuster Cross-Promotion: 3 Months of Free DVDs By Mail

Dish Network (s DISH) Thursday unveiled its first cross-promotional deal with the Blockbuster assets it just picked up in a bankruptcy auction. Under the promotion, Dish will provide three months of free access to Blockbuster’s DVD-by-mail service to any new subscribers of its satellite TV service.

As part of the promotion, new Dish subscribers will have unlimited access to more than 100,000 DVD and game rentals through the mail. Unlike Netflix (s NFLX) and Redbox, (s CSTR) which negotiated longer DVD-rental windows in exchange for lower DVD acquisition costs, Blockbuster’s library includes day-and-date availability of DVDs at the same time they go on sale. The service also allow subscribers to return and exchange DVDs in Blockbuster stores.

The cross-promotion is just the first of what will likely be many deals that Dish will offer to its subscribers, as it seeks to nudge the DVD rental business toward profitability. The hope, of course, is that once those three months are up, newly signed up DVD-by-mail customers will stick around and continue paying for the DVD subscription service. It’s also a way to promote services that don’t include keeping unprofitable Blockbuster storefronts open. A few weeks after the acquisition closed, the satellite provider is still evaluating which stores it will shutter after taking over the business.

For Dish, the promotion is also a relatively cheap way to entice new customers to sign up for its pay TV services, by offering up a service that usually costs about $12 a month. It’s also a novel way for Dish to leverage assets it now owns, as opposed to subsidizing trial subscriptions to premium cable networks like HBO (s TWX) or Showtime (s CBS) as incentives.

Dish recently became the subject of legal action on the part of Starz and Disney (s DIS) for offering a promotion that gives away access to Starz’s networks for a full year to all its subscribers. The premium cable programmer argued in its filing that Dish had no right to distribute its channels for free, while Disney argued that the promotion not only violated its agreements with Starz, but also amounted to copyright infringement on Dish’s part.

Photo courtesy of Flickr user Andrew Levine.