The Dish satellite network has successfully bid $320 million in a bankruptcy auction for Blockbuster Video, the once-mighty rental chain squeezed out by Netflix on one end of the spectrum and dollar-a-night supermarket movie-vending machines at the other.

Dish seems determined to keep the brand and at least some bricks-and-mortar locations alive. But how long will be it before hard-copy delivery of movies and TV shows will be anything more than a niche play?

“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,” Tom Cullen, executive vice president of Sales, Marketing and Programming for Dish Network, said in a statement. “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.”

Clearly Blockbuster’s on-demand streaming service was a big asset for Dish to acquire. Adding it to the Dish network’s existing array of offerings makes it a more significant product than its current incarnation as an also-ran competitor to Netflix and Amazon. Those services are already challenging satellite and cable providers for on-demand Hollywood fare and for subscription dollars.

Blockbuster has learned, just as Borders did, that being a well-located, ubiquitous retailer with a cornucopia of content isn’t necessarily enough to beat the nibblers like RedBox (which sells your product to customers in the midst of their daily errands) and the upstart innovators you haven’t yet caught up to (digital media).

But it wasn’t that long ago that Blockbuster put a lot of little neighborhood video stores out of business, so this is just part of the economic circle of life.

Dish beat out three other bidders, including noted takeover specialist (aka corporate raider) Carl Icahn. The deal is still subject to bankruptcy-court approval.

Dish may be able to pull a bit of FedEx-Kinkos out of this deal, using locations (though 1,700 seems very unlikely) to promote its brand and services and sign up customers while they get a Johnny Rockets burger next door at the strip mall.

But the real action is getting behind a very simple idea: People are done with the disk. Or to paraphrase another old commercial: Wow, what a difference … a decade or two makes.