New ‘Blockbuster Movie Pass’ streaming service limited to Dish subscribers

If you believed Dish Network and Blockbuster would put together a Netflix competitor, it turns out you were only half right.

The satellite TV provider announced today an integrated service dubbed Blockbuster Movie Pass which will cover all facets of home entertainment – unlimited instant streaming, by-mail rentals and video games for $10/month.

Before you get too excited, check your monthly TV bill. The Blockbuster Movie Pass will be exclusive to Dish subscribers when it launches on October 4th.

Speaking to press and online viewers via Ustream, Dish CEO Joseph Clayton announced the new home entertainment package, calling it “the first big step” toward integration with the Blockbuster brand.

The service combines Blockbuster’s traditional by-mail rental service, which itself boasts over 100,000 DVD, Blu-ray and video game rentals, with 3,000-4,000 streaming movies at launch. The pass grants unlimited access to both and in-store returns.

Clayton opined that Dish and Blockbuster need to change with the times, taking a subtle yet ironic swipe at Netflix in the process: “When the economy changes, when the technology changes and when the customer changes, you better change.” Admitting that Netflix and Hulu have successfully carved out a niche with movies and TV shows (respectively), Clayton boasted “we’re going to do all of the above.”

Vivek Khemka, Vice President of Product Management for Dish, briefly demonstrated how it all works – browsing through recent movies such “Alice in Wonderland,” “Prince of Persia” and “The Social Network” with basic genre and release date filters. Content from Starz, Epix and The Sundance Channel would be available promised Khemka, including popular shows like “Torchwood” and “Spartacus.”

“Consumers are looking for a better value for their entertainment dollar,” said Ira Bahr, Dish Chief Marketing Officer. A $10 package is very attractive to U.S. consumers frustrated with multiple sites, log-ins and bills, he added. Bahr revealed the Blockbuster Movie Pass would also featured tiered services; $15/month would net Dish subscribers two discs out at a time, while $20/month entitles them to three.

Blockbuster president Michael Kelly pointed out that since Dish’s $320 million acquisition of the former rental king its fortunes have reversed. “We’ve increased store traffic by almost 100 percent and added 500,000 new subscription services in the past month,” said Kelly, who was appointed in May.

Dish is dedicated to catering solely to its subscribers, but Kelly insisted that the companies continue to investigate bringing the service to non-subscribers, too – a smart move considering the satellite TV company actually lost 135,000 subscribers in the second quarter of 2011.

Though Netflix is enduring a mighty backlash and estimates it could lose over one million customers this fall, anyone with a broadband connection or street address can still sign up for it.

The big battle over streaming has been postponed – for now, at least.