As TV operators scramble to retain subscribers spooked by economic uncertainty, the new subscription service may give DISH an edge in its ongoing customer retention efforts. This kind of play is not new to the satellite operator which has deployed new technologies and service propositions in the past to maintain and grow its subscriber-base. Back in 2004 for example, DISH handed out free DVRs to existing and new subscribers which helped sustain the operator's double digit subscriber growth rates well into 2006. Similarly, DISH hopes that a free Movie Pass would convince subscribers who have contemplated churning for one reason or another to stay with the company.

More importantly, this service has the potential to become a significant value driver for the operator. Dish has competed on price historically, settling for lower ARPUs than many competitors in order to stimulate subscriber growth. But with net additions slowing down, ARPU enhancement has become vital to the company's long-term profitability. This new service gives customers an incentive to upgrade to ARPU-enhancing higher tiers and advanced services. Low-tier subscribers, for example, may choose to move to America's Top 200 package or higher to get complimentary access to the service for a year. By the same token, subscribers not taking a DVR may now choose to pay the monthly fee for one because of the value the Blockbuster Movie Pass adds to the DVR tier. Also, customers wishing to stream content to their TVs need may be convinced to pay extra for the required HD programming tier.

It is interesting to note that this is the first Netflix-like hybrid subscription service to be rolled out by a pay-TV provider, but its current iteration still lacks a number of the elements that have Watch Instantly so popular. For one, Netflix's success has been driven in part by the large number of Watch Instantly enabled devices available.  Although a set-top-box eliminates the need for Dish Network to integrate with TVs and Blu-ray players, it still leaves all mobile devices including tablets and mobile phones out of its realm.  Second, Dish's streaming content library is limited, with only 3,000 movies and "hundreds" of TV shows available for TV viewing and 4,000 for PC viewing. Amazon's Prime Service reports having more than 9,000 titles for streaming, while Netflix reports having at least 20,000 movies and TV shows. Finally, as long as Blockbuster Movie Pass is tied to a DISH TV subscription, its wider appeal will remain limited for obvious reasons.