Earlier this month, Dish Network purchased Blockbuster, Inc. to the tune of $320 million (or “$228 million in cash after adjustments for available cash and inventory”) at a bankruptcy court auction for the once-great video rental chain. Blockbuster, Inc. filed for Chapter 11 last fall with nearly $1 billion in debt, much of it to major movie studios.

At the time, we wondered what the satellite television provider’s plans for Blockbuster were. Now, recent documents have made that picture a little bit clearer. Read on after the jump.

In papers submitted to the U.S. Bankruptcy Court over the weekend, Dish indicated (link via TheWrap) that it planned to take over the leases for about 500 or 600 of Blockbuster’s roughly 1,700 stores. At the time that Blockbuster entered bankruptcy last year, it had 3,200 stores. In its prime, the chain operated 5,700 U.S. locations and another 3,300 international stores.

It’s not clear at this point what Dish will do with the stores that it’s keeping open. Reports suggest that Dish plans to use Blockbuster’s assets in order to create a competitor to Netflix, while still maintaining some physical retail presence — at least for the time being.

I don’t think I’m alone in thinking that it’s probably only a matter of time before those 500-600 stores find themselves shuttered as well. More people than ever are watching movies through services like Netflix, Hulu, and Redbox, no pricey brick-and-mortar storefront required, and I’m skeptical that Dish will find a way to change that trend. And if Dish can’t find a way to draw people in, it’ll eventually become more cost-efficient for them to simply give up on rental stores altogether.

Dish will be finalizing its purchase of Blockbuster sometime today. Expect to hear word soon on exactly which locations will be staying open.

Discuss: Will you be sad to see Blockbuster’s locations dwindle down to the hundreds? What could Dish Network do to convince you to forget about Netflix and patronize actual video stores?

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