We do — that was that state of digital media when paidContent launched in 2002. Other weird things were happening back then too: People still got much of their news from television and newspapers, and they learned about major events after they had already happened.

There have been some huge shifts since 2002: Tablets and smartphones are now ubiquitous, lots of people read on their digital devices, and just about everyone is part of a social network or three. This summer is the tenth anniversary of our launch. In an effort to gain some perspective on the past decade in digital media, I’ve been reading back through paidContent’s archives — a collection of over 80,000 posts.

Since I was only a freshman in college when paidContent came to life, I often didn’t know, as I read through the stories from the early days, how things had begun or how they turned out. As I watched them unfold, I wanted to grab our readers’ arms and give them advice (“Don’t buy that Zune!” “Invest in Facebook!” “Go for the good Twitter handle now!”). But I also realized how difficult it is to predict success.

Some takeaways from my trip through the archives:  Some companies — AOL and Yahoo come to mind — have been consistently bad at predicting what consumers want. And a couple of companies, namely Apple and Amazon, have been very good at it. Also, being a native digital company helps, but it’s no guarantee of success (what up, MySpace?). And after all these years, it’s still not clear what content customers will pay for, or how much they’ll pay.

Streaming and Moviebeaming

What do analysts, CEOs and bloggers have in common? None of us can predict the future. Roger Ebert joked in 2002 that “on-demand streaming movies on the Web, like HDTV, are five years in the future — and will be for at least another 10 years.”

If Disney’s Moviebeam had been the only game in town, Ebert probably would have been right. When it launched in three cities in 2003, customers paid $6.99 a month to use a device that could hold 100 movies and plugged into the back of a TV set. They also had to pay for each movie they watched– billing was done via the phone line. The company went through various unsuccessful iterations before India’s Valuable Group bought it in 2008. It was never heard from again.

Netflix almost went down the same road. It had a plan to release a Moviebeam-like “proprietary set-top box with an Internet connection that could download movies overnight.” But instead, it decided to forge ahead with streaming — starting with a complicated “quota hours” system in 2007 and moving to unlimited streaming in 2008. By 2010, the majority of subscribers were streaming something, and the company began offering streaming-only subscriptions, though CEO Reed Hastings said that same year that the company would keep shipping DVDs until 2030. (We’ll see about that.)

ABC was the first network to sell episodes of its shows on iTunes, back in 2006, and to stream shows free with ads on ABC.com — and later on AOL. But by the time premium subscription service Hulu Plus launched in 2010, the platforms getting the attention were devices with built-in access, like Internet-enabled TVs, Blu-ray players, and tablets.

Return of the living dead

Speaking of AOL: It’s something of a miracle that the company still exists. In 2000, when it merged with Time Warner, it was valued at $350 billion, and the next year, more than 24 million people in the U.S. were paying for its Internet access service. By the end of last year, that number had dwindled to just 3.3 million subscribers. Here’s a quick recap of some of AOL’s miscues over the years:

• AOL Voicemail ($5.95 per month)
• A teen service called Red (featuring “a talking head—using the image of an actual employee—that uses software to answer users’ questions”)
• A digital music partnership with Burger King
• A reality show called “Gold Rush”
• Social networking site AIM Pages
• Going free
• The hyperlocal Patch blogs

Though AOL was once a high flier, no other company ever liked it quite enough to buy it. Google bought a five-percent, $1 billion stake in AOL in 2005, leading analysts to wonder if Microsoft missed out. That resulted in a $726 million writedown in 2009. Time Warner bought back Google’s stake and finally spun off “the albatross” in December 2009.  AOL is still promising a bounceback. “The executive team expects a profitable content business by next year,” CEO Tim Armstrong said in May 2011.

Yahoo hasn’t fared much better. The company launched Yahoo Platinum in 2003; for $9.95 a month, subscribers got access to audio and videos.  The program was dead by October of that same year. It later tried a Twitter-wannabe microblogging service (“Meme…where you share everything that you find that’s interesting,”). Perhaps the smartest move Yahoo ever made was not buying AOL.

Where did these companies go wrong? In 2010, former Time Warner CEO Gerald Levin pondered that question in an interview with the New York Times . The AOL-Time Warner deal was “undone by the Internet itself,” he said. “I think it’s something that no one could have foreseen, and to this day, whether Apple is going to dominate entertainment or whether Amazon is going to dominate publishing, all the old business plans are out the window. How do you get paid for content?”

Know what’s cool? A billion dollars

In 2006, an RBC Capital analyst estimated that a certain social networking company would be worth $15 billion in a few years, based on “raw, unprecedented user/usage growth.”

Six years later, Facebook went public with a valuation of $104 billion. Too bad the analyst wasn’t talking about Facebook but about MySpace. The social networking company that Rupert Murdoch acquired for $580 million in 2005 sold for just $35 million in 2011.

Why did Facebook soar while MySpace — and other social networking services like Friendster — sank? It allowed people to build real connections using their actual personal information, and rolled out a product that was ready to scale and had good technology. Other companies realized sharing was important too — in 2005, Yahoo SVP Jeff Weiner called sharing “the next chapter of the World Wide Web” — but Facebook was able to implement it in a way that kept users coming back. The site surpassed Yahoo and AOL for “stickiness” in 2009, when Nielsen found users spending an average of four hours and thirty-nine minutes a month on Facebook.

Social has already disrupted some industries — witness the rise of Twitter and the way it has changed the way news is reported, with stories like Osama Bin Laden’s assassination breaking there first. In a sign of the importance of these emerging platforms, newspapers like the Wall Street Journal and New York Times are launching “Everywhere” initiatives to deliver news to readers where they are already hanging out.

Fast food and music don’t mix

Hard to believe it now, but there was real skepticism that iTunes’ 99-cent songs would be able to compete with peer-to-peer file-sharing services. “According to academics who’ve studied the economics of digital music distribution,” we wrote in 2003, the year iTunes launched, “the cost still seems too high to attract users of peer-to-peer file trading services.” The piece cited an economist who believed “the appropriate price of a downloaded song is 18 cents.” In fact, Real Networks dropped its song prices to $0.49 in an attempt to compete against Apple.

In the end, consumers choose selection and convenience over P2P networks. We called iTunes “a kickstart for the micropayments industry.” Was it? While Steve Jobs said in 2004 that Apple wouldn’t hit its one-year, 100 million songs downloaded goal, global digital music sales crossed $1.1 billion in 2006. In April 2008, Apple surpassed Walmart  as the largest music seller in the United States.

The company that arguably started the digital music revolution — Napster — didn’t survive. Once it no longer offered “free,” it was done, though it tried to reincarnate itself: launching a mobile music service, “Napster To Go,” with AT&T in 2004 (the one smartphone that supported it could hold up to 6 songs), partnering with Circuit City on a digital music store, getting itself acquired by Best Buy in 2008 ,and then being bought back by Rhapsody in 2011. Unfortunately, Rhapsody was already losing out to newer (and free) streaming services like Pandora and Spotify.

The partnerships with Circuit City and Best Buy, though, were probably the kiss of death. One of the big trends of the past 10 years has been brick-and-mortar retail stores’ consistent failure to compete effectively against digital-native companies. Best Buy wasn’t the only retailer to try to crack the digital-content business — and fail: Target and Sears both took a shot. And McDonald’s sold digital content over its WiFi network and even tried DVD rentals in its restaurants.

Do you like the feel of paper?

Just as digital music didn’t really take off until Apple introduced the iPod, the ebook revolution didn’t take place until the arrival of the Kindle. In paidContent’s early years, ebooks were written off as a failure in part because publishers couldn’t figure out what to do with DRM. (In 2003, “temporary electronic ink” that would disappear after a few months was floated as a possible solution.) Barnes & Noble decided to stop selling ebooks in 2003, and Yahoo stopped selling them in 2004.

Meanwhile, Amazon and Google were pushing forward. Google launched Google Print – now called Google Book Search, and still besieged by lawsuits seven years later. Amazon tested two now-defunct programs: Amazon Pages, which allowed customers to buy access to digital copies of select pages from books, and Amazon Upgrade, which bundled print books with online access to the complete work.

Customers weren’t biting. Then Amazon came out with the Kindle in 2007 for $399. Less than two years later, Amazon was selling more Kindle books than print books, and ebooks now make up over 20 percent of some big-six publishers’ sales. Barnes & Noble has had some success with its Nook e-reader and digital bookstore, but bankrupt Borders shuttered all its stores in 2011. Meanwhile, the Department of Justice suit against Apple and five big publishers for allegedly colluding to set e-book prices drags on.

Good thing Steve Jobs looked beyond ringtones

A Forbes survey back in 2002 found that “business professionals” would be willing to pay for “news content to be delivered to their cellular devices,” and some media companies tried early mobile experiments. Verizon offered a cell phone version of the Yellow Pages — which, at $19.95 per year, gained 15,000 subscribers in three months. But starting in 2004, everyone decided the future was in ringtones. A $4 billion global business by the end of the year, one company projected.

So, so many ringtones. You could buy them from Rolling Stone or from an ATM-like device called E2Go. A fall 2004 marketing campaign let you mix your own ringtones on Levi’s website. Billboard launched a top ringtones chart.

Could ringtones “prove to be a passing fad”? we wondered late in 2004. Luckily, yes — a new technology came along to shake up the mobile market. No, it wasn’t the $500 ESPN phone, but the iPhone, which came out in 2007. And by opening its platform up to third-party app developers, Apple got users ready for its next ecosystem-changing device, the iPad, in 2010.

Monetizing mobile

Advertising has always been a fuzzy business — how exactly do you measure engagement and success? Well, that’s still the big debate about advertising in the digital era.  ”If here’s anything that’s really holding back ad spending on the web, it’s the lack of good measurements,” Tim Armstrong, then Google’s VP of national sales, said in 2007.

Mobile advertising has also faced obstacles. In 2006, mobile carriers began allowing advertising despite fears of annoying customers. Customers were indeed annoyed – 79 percent of them found mobile advertising annoying, according to a 2007 Forrester study — but they could “see the potential benefits of mobile advertising and marketing to themselves,” particularly if they could get a useful special offer or coupon.

Further complicating matters for advertisers: The smartphone market is fragmented among different brands — marketers don’t want to spend the money to create different ads for Android and iOS — and there are two mobile ad universes: mobile browser and apps.

Nevertheless, mobile advertising has gained ground, crossing  $1 billion in the U.S. for the first time in 2011, according to the Interactive Advertising Bureau, totaling $1.6 billion for the year.

The next opportunity is social media advertising. And once again, it will be a challenge to figure out some standardized metrics. What’s a retweet worth, anyways?

Back to where we all began

Though micropayments worked well for music when Apple launched iTunes, the path to payments for written content has been rockier. In 2004, we wrote that “micropayments today are still characterized by a large number of competing transaction types” – including direct-to-bill, merchant aggregation, prepaid accounts and direct transfer – and “each of these face the current incumbent in digital content distribution: the flat-fee subscription model.”

Eight years later, it appears that the subscription model has won out. The iPad opened the door for magazine and newspaper publishers to create new revenue selling content on that platform, but the results have been mixed. When Rupert Murdoch’s “The Daily” iPad newspaper launched in early 2011, the company called it “the model for how stories are told and consumed.” We wrote, “The bet here is that while consumers are less and less likely to reach into their pocket for a few quarters to buy a newspaper, they might not care about the 14 cents on their credit card for a copy of an e-newspaper.” A year and a half later, The Daily has over 100,000 paying subscribers — but it’s living on borrowed time and may not get through the five years its publisher has said it needs to break even.

Writing for the web, of course, has been around for awhile. At the beginning of the decade, blogging was called “nanopublishing,” and the question was how blogs could support themselves doing it. All sorts of models have arisen. For example, Gawker tried a licensing deal with Yahoo, but that relationship ended a year later. The deal “garnered way more attention than we expected, but less traffic,” Gawker CEO Nick Denton said in 2006.

Some bloggers have stayed independent and make a living from advertising (or from their day job); others write their blogs under a newspaper, website or larger magazine’s umbrella — see the Dish’s Andrew Sullivan, FiveThirtyEight’s Nate Silver, WaPo’s Ezra Klein. Or, they go to work for the Huffington Post!

Magazine companies have grappled with whether to bundle digital editions with print subscriptions or charge for them separately. Time Inc. — which first put digital editions of its magazines behind AOL’s paywall in 2003 — started out charging separately, but today Time Inc. and Condé Nast print subscribers get the digital edition free. Hearst, meanwhile, is charging separately, and it said its digital business in the U.S. became “solidly profitable” for the first time in 2011.

Could there ever be a Netflix for magazines? Time tried it for print versions with its 2008 Maghound service. It failed, due to a lack of marketing and reader interest. Magazine publishers are trying again with joint venture Next Issue Media.

Many newspaper publishers, most notably the New York Times, tried paywalls at the start of the decade and then abandoned them – only to return to the model in the past couple years.  In its most recent earnings report, the NYT said it has 454,000 digital subscribers. Is that enough to sustain the newspaper in its 21st-century transition?  Probably the best answer to that came from  Vivian Schiller. But it was in response not to the NYT’s recent digital subscriber numbers, but to the NYT’s decision in 2004 to close the paper’s first paywall, known as TimesSelect. Schiller, then the SVP and general manager of NYTimes.com, was asked whether TimesSelect had worked.  “It did work,” she said. “It’s just a matter of as compared to what.”

Birthday cake photo courtesy of Shutterstock user [Robyn Mackenzie].

TV photo courtesy of Shutterstock user [Somchai Buddha].

Zombie hand photo courtesy of Shutterstock user [lineartestpilot].

Piggybank photo courtesy of Shutterstock user [cardiae]

Fast food photo courtesy of Shutterstock user [Sergio Martinez].

Book photo courtesy of Shutterstock user [TrotzOlga].

Ringtones and apps photo courtesy of Shutterstock user [violetkaipa].

Cash register photo courtesy of Shutterstock user [titelio].

Magazines photo courtesy of Shutterstock user [bernashafo].

On Monday, Dish Network reported that its Blockbuster unit had turned a $13.9 million profit for the first quarter on revenue of nearly $334 million.

Blockbuster has turned a narrow profit every quarter since Dish purchased it out of bankruptcy auction for $223 million in early April of last year.

Meanwhile, Dish effectively used its Blockbuster-branded streaming service to help add a whopping 104,000  new subscribers in the first quarter. (The company is offering its new customers free streaming of Blockbuster films as well as rentals through the physical chain for 90 days.)

But after shuttering a third of Blockbuster’s 1,500 brick-and-mortar stores in the first quarter, don’t look for Dish to augment the remaining 1,000 locations now that the red ink has stopped flowing. Englewood, Colo.-based Dish said it plans to close 100 more “underperforming” Blockbuster stores in the second quarter.

In fact, Dish’s strategy for the DVD-rental side of Blockbuster seems similar to the plan put in place by Netflix, which has signaled its intention to stop nurturing its disc-by-mail  business and let it slowly die on the vine.

“Our Blockbuster business, and retail stores in particular, face risks, including, among other things, operational challenges and  increasing competition from video rental kiosk, streaming and mail order businesses that may negatively impact the business, financial condition or results of operations of Blockbuster,” Dish wrote in its Form 10-Q filing to the Securities and Exchange Commission Monday.

For Q1, Dish nearly doubled subscriber growth of 58,000 from the same period in 2011, while revenue was up 11 percent to nearly $3.58 billion. Net income slipped to $360 million from $549 million in Q1 2011, when Dish received cash out of a legal settlement with TiVo.

The No. 3 paid TV service in America behind Comcast (NSDQ: CMCSA) and DirecTV (NYSE: DTV) reported earnings of $313 million for the October-through-December period, up from $252 million a year prior. Revenue was also up 13 percent to $3.63 billion. And Dish added 22,000 subscribers in the quarter, ending a lengthy customer drought. Dish now has about 14 million U.S. subscribers. All of these metrics met or beat the forecasts of analysts.

“By introducing new Blockbuster-branded services, we’ve begun to turn the tide in subscriber losses while continuing to face increased competitive pressures,” Dish CEO Joe Clayton said in a statement. Dish paid $228 million in cash last April to acquire Blockbuster out of bankruptcy. It then launched a Blockbuster-branded streaming service in October, bundling it with its satellite video service and diversifying its business in the face of a maturing U.S. pay-TV subscription market.

Dish’s competitors are also getting into the internet movie-streaming game, with Comcast announcing a new service called Streampix earlier this week. While Dish seems pleased with the competitive juice that Blockbuster’s streaming operation is giving it, the satellite company seems determined to slowly back away from Blockbuster’s physical rental-chain roots. Citing competition from kiosk operators like Redbox, Dish said it’s closing around 500 Blockbuster stores with expiring leases. It also said it “may close” additional stores. With Dish proving successful so far in its objective to transition Blockbuster into a brand for streaming video content, it seems unlikely the company will have any interest in operating the remaining brick and mortar stores beyond the lifespan of their lease agreements.

Meanwhile, Dish chairman Charlie Ergen said the company eagerly awaits the Federal Communication Commission’s approval decision on its $1.4 billion acquisition of bankrupt wireless spectrum company TerreStar. With spiraling programming cost cutting into the margins of the pay TV business, cable has found relief in broadband services. For its part, Dish is looking to augment its portfolio with a new wireless broadband service, too. The FCC has set a March 12 deadline for its decision.

“It would transform not only our company but the way people use wireless in the United States,” Ergen told investors Thursday. “The business we’re in today and wireless (broadband) are a package deal. Right now the cable industry is best positioned to take advantage of that. I hope the administration wants some competition to that.”

The Hollywood studio wants to enforce the industrywide 28-day window between the date new DVDs go on sale and the date they are available to rent.

Blockbuster has resisted efforts to enforce the window, and earlier this year rented retail DVDs of Horrible Bosses and The Green Lantern inside the 28-day window without Warner Bros.’ permission.

The move is the boldest yet by a Hollywood studio trying to revive flagging DVD sales. Physical films sales fell 19 percent year-on-year in the first quarter of 2011 to about £1.3bn, in a period when home streaming through online services such as Netflix and LoveFilm grew rapidly.

Kevin Tsujihara, the president of Warner Bros. home entertainment, indicated in an interview with the Financial Times on Thursday that the studio will next year move to expand the already contentious window.

“[Blockbuster] felt it was important to continue to offer day and date rental, so rather than work with us they went around us,” he told the FT.

“The question is: how do we make ownership more valuable and attractive? We have started the process of creating a window in bricks-and-mortar DVD and Blu-ray rental.”

Warner Bros. has similar 28-day window agreements with the online streaming services Redbox and Netflix (NSDQ: NFLX) in the US.

Tsujihara suggested that those services may have to wait longer to offer film rentals to viewers when talks to renew the agreement begin next year.

“The Netflix and Redbox deals are going to be expiring at the end of the year and beginning of next year and it’s likely we will try to extend those windows,” he told the FT.

The move is likely to be fiercely contested by the rental services, some of which are already feeling the pressure from US broadcasters and studios.

Netflix saw its shares plunge 32 percent, to $79.40 (£49.65), in the past week after it posted a loss of more than 800,000 subscribers and said that next year’s expansion in the UK and Ireland would push it to a global net loss.

Blockbuster had not responded to a request for comment at the time of publication.

This article originally appeared in MediaGuardian.

Our July streaming video chart followed word that Netflix (NSDQ: NFLX) was separating DVD and streaming subscriptions and raising the price 60 percent for households that kept both. Last started with Netflix CEO Reed Hastings announcing plans to literally split the company in two, spinning off DVDs to new subsidiary Qwikster — and ended with Dish Network (NSDQ: DISH) that it was doing a variation on the reverse.

(As soon as we published this chart, the landscape changed. We’ve updated to reflect today’s news from Amazon.)

Dish and its bankruptcy bargain *Blockbuster* are offering a combined streaming/DVD-by-mail package to bundle with monthly satellite programming fees. But a look at this edition shows why it’s not that simple. For instance, Netflix and Hulu streaming crosses platforms and devices; *Blockbuster* Movie Pass, which requires a Dish HD DVR, launches Oct. 1 with only TV and PC.

On the other hand, this is one place Dish Network comes in handy. Dish and Hulu Plus subs gets authenticated access to Fox (NSDQ: NWS) prime-time programming a week ahead of anyone else while, of the four, only Dish can provide Turner networks TNT and TBS on the go.

What else separates Amazon (NSDQ: AMZN), Hulu, Netflix and new entrant Blockbuster Movie Pass? Check out our latest chart, embedded below:

More information can be found in our VOD and DVD archives.

Dish and its bankruptcy bargain *Blockbuster* are offering a combined streaming/DVD-by-mail package to bundle with monthly satellite programming fees. But a look at this edition shows why it’s not that simple. For instance, Netflix and Hulu streaming crosses platforms and devices; Blockbuster (NYSE: BBI) Movie Pass, which requires a Dish HD DVR, launches Oct. 1 with only TV and PC.

On the other hand, this is one place Dish Network comes in handy. Dish and Hulu Plus subs gets authenticated access to Fox prime-time programming a week ahead of anyone else while, of the four, only Dish can provide Turner networks TNT and TBS on the go.

What else separates Amazon (NSDQ: AMZN), Hulu, Netflix and new entrant Blockbuster (NYSE: BBI) Movie Pass? Check out our latest chart, embedded below:

More information can be found in our VOD and DVD archives.

Dish CEO Joe Clayton began the press conference noting that Blockbuster’s brand may be tarnished on Wall Street, and in the media, but to “Main Street, the Blockbuster name means something of value to families.”

The new product, dubbed the Blockbuster Movie Pass, launches a week from Saturday. It promises a complete integration of Blockbuster and Dish by offering DVDs by mail and streaming access as an add-on to Dish subscriptions. That includes 3,000 movies streamed to the TV, 4,000 streamed to the PC, 20-plus streaming movie channels and 100,000 movies, TV shows and games by mail. At first glance, the competition would seem to have little to worry about, if the contest is judged by the streaming numbers game: Netflix has 20,000 titles available for instant streaming, while Amazon offers about 9,000 through its Amazon Prime Instant Video service.

What do Dish Network (NSDQ: DISH) customers get for it? On top of the authenticated content they get through Sling, there will now be and games discs via Blockbuster’s own mail rental service. Even so, it’s the streaming offer that’s intended to help Dish attract new customers, Clayton said. In addition, Clayton said this isn’t just about movie rentals and streams, it also involves access to thousands of game rentals through Blockbuster (NYSE: BBI).

The Blockbuster Movie Pass will cost current Dish subscribers $10 a month as a starting rate that includes one DVD rental at a time; for a limited time, it will be included on some tiers for new subs at no extra charge. The pricing is tiered, with the next level set at $15 and the premium version available for $20 a month. Netflix split its DVDs from streaming Sept. 1, charging $8 for streaming and $8 for one DVD at a time. Later this year it literally will spin off DVDs to a new business internally, Qwikster, creating dual accounts and sites for anyone who wants both services.

Separately, each Netflix service is 20 percent lower than the monthly Blockbuster Movie Pass fee but when the combined cost is taken into account, Blockbuster comes in far lower. That’s only on the service, though, since only Dish subscribers have access and they have to pay monthly fees to even qualify. The truer test will be when Blockbuster comes out with its promised streaming-only service available to non-Dish subs, but based on today’s comments, that won’t be soon.

In terms of revenue, Dish is also counting on some ad support for the streams.

Michael Kelly, president of Blockbuster, offered a glimpse of the progress the companies have made together since the acquisition five months ago. “The hero of the Blockbuster brand has always been the store,” Kelly said, noting that there are still 1,500 brick-and-mortar shops still operating. “We’ve been working on improving the in-store experience and increased traffic to the locations 100 percent over the past five months. In light of the changes in the marketplace, we’ve signed up 500,000 new members over the past few months.”

Kelly also pointed to the Facebook integration that was announced yesterday.

During the Q&A, Kelly said that the bundling of streaming with satellite is key to arrangement, so don’t expect a standalone streaming service not connected to Dish any time soon.

“Serendipity” played a role in the timing of Dish’s reduced pricing, Clayton noted, when asked about the recent problems Netflix has faced as a result of its price hike last month. “Sometimes, all the best planning can’t replace luck,” he said. “We’ve been aware of some of the tension in the marketplace over pricing for some time. But we’ll take luck too.”

While the Blockbuster Movie Pass service could help Dish attract new subscribers, at least at this point, it cannot be considered a direct challenge to the standalone services offered by Netflix and Amazon (NSDQ: AMZN). On that level, some disgruntled Netflix consumers may ultimately choose to go with Dish instead. But as more cable and satellite companies offer increasing ways to view on-demand video, the Dish/Blockbuster combo will simply represent one of many programs that use streaming to lure pay TV subscribers.

More about pricing: New subscribers who commit to a two-year plan for the America’s Top 200 package or higher before Jan. 31, 2012, get the first year of Blockbuster Movie Pass included. (Dish calls this $360 in savings — $20 a month discount plus the waived streaming/DVD fee.) New subs who get the America’s Top 120 package, which runs $30/$45, get three months free. Subscription streaming access requires a Dish Network HD DVR. The equipment usually comes with a new subscription but using the DVR runs $6 a month. The fee is waived for the first DVR.

Here’s how Dish and Blockbuster management explained the new deal at a San Francisco press conference:

Video streaming by Ustream

Dish estimates the deal actually will cost about $228 million in cash when it closes later this quarter, taking cash and inventory adjustments into account. The pre-market announcement was typically terse, with a prepared statement from Tom Cullen, EVP of Sales, Marketing and Programming: “With its more than 1,700 store locations, a highly recognizable brand and multiple methods of delivery, Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for DISH Network. While Blockbuster’s business faces significant challenges, we look forward to working with its employees to re-establish Blockbuster’s brand as a leader in video entertainment.”

Some bidders wanted to liquidate Blockbuster. Ergen — who is known for being frugal — doesn’t need to own a chain of stores to sell subscriptions in a retail environment but a revamped Blockbuster could offer the chance to showcase Dish without competition from DirecTV (NYSE: DTV) or others. Perhaps more important for a company that has been pushing its ability to serve subscribers in ways beyond the satellite dish, including the emphasis on delivering programming across devices, Blockbuster On Demand offers instant movies on a wide range of devices, including connected TVs, Blu-Ray and mobile, for rental and sale.

The Wall Street Journal was first to report the deal, which beat out bids from Carl Icahn, among others.

Its 30-second pitch for why somebody might be interested: “The purchaser will be able to take full advantage of Blockbuster’s many strengths, which include an internationally recognized brand name, an exceptional library of more than 125,000 titles, millions of loyal customers, and a multi-channel content distribution platform. Because of its ability to deliver physical content (through DVDs) and digital content (through streaming), Blockbuster can offer customers the unique ability to access any movie, any time.”

The company’s own efforts to rebuild its business around those strengths have not been successful. It has long argued that it has the potential to be a successful digital player but has repeatedly failed to deliver. Most recently, it has been spending heavily to advertise that it has new titles from major studios before its competitors to do so — a pitch that has not slowed growth at rival Netflix (NSDQ: NFLX) but does seem to have impacted results at Redbox.

Blockbuster says that a new entity set up by a consortium of its debt holders has offered to buy it for $290 million — but it is now asking for additional offers from “financial and/or strategic” buyers. It expects the entire sales process to be completed within two months.

The largest unsecured media creditor is Twentieth Century Fox Home Entertainment; Blockbuster owes the News Corp (NSDQ: NWS). unit $21.6 million. Warner Home Video, $18.9 million, and Sony (NYSE: SNE) Pictures Home Entertainment, $13.3 million, are next.