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GameFly and USPS are at odds, and could go to court

Video game rental service GameFly and the United States Postal Service (USPS) could be headed to court over accusations that USPS breaks thousands of game discs each year, and offers preferential treatment to Netflix and Blockbuster.

GameFly claims it sends 590,000 games to its subscribers each month and receives 510,000 of the games back.  Around one or two percent of the total games sent each month are reportedly broken by USPS.

Ars Technica estimates that GameFly could be losing up to $295,000 per month in broken video games, if each game costs $50 to replace and one percent of all games each month are broken.

The video game rental service filed an official complaint with the Postal Regulatory Commission, accusing USPS of discriminating against the company.

To help reduce the number of games damaged, GameFly wants USPS to manually sort all of the games -- rather than use the automated sorting system -- which inadvertently damages CDs.

GameFly also believes USPS favors Netflix and Blockbuster over its service, as both companies send out a larger amount of discs.

"Until recently, none of the larger-volume DVD rental companies offered video games," said GameFly in the complaint.  "On February 11, 2009, however, Blockbuster, which hitherto had offered only movie DVDs (which GameFly does not offer), announced that Blockbuster was expanding its DVD rental service to include video games in the second quarter of 2009. As a result of this initiative, GameFly now faces direct competition from a rival that is larger and longer established — and which, because of the preferential treatment given by the Postal Service, enjoys a substantial cost advantage in the distribution of its DVDs to consumers.”

The Postal Regulatory Commission has given USPS 30 days to file a response, and the PRC will decide whether to have a hearing or dismiss the case within 90 days.

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If they're that concerned...
By Noya on 4/26/2009 5:05:15 PM , Rating: 3
If they're that concerned with broken discs they should design and implement a super thin clamshell case for shipping.

RE: If they're that concerned...
By foolsgambit11 on 4/26/2009 5:41:39 PM , Rating: 5
They tried little thick sleeves for the discs; that didn't work. Maybe a hard plastic holder would work better, but why increase your operating costs because what is essentially a contractor failed to provide the service you contracted them for? Especially when you know they are capable of providing the service better, because they do for your competitor.

It makes better business sense to file a complaint (and possibly sue) to petition for equal treatment.

RE: If they're that concerned...
By vapore0n on 4/26/09, Rating: -1
RE: If they're that concerned...
By bodar on 4/26/2009 8:02:36 PM , Rating: 5
"On February 11, 2009, however, Blockbuster, which hitherto had offered only movie DVDs (which GameFly does not offer), announced that Blockbuster was expanding its DVD rental service to include video games in the second quarter of 2009.

Someone didn't RTFA...

RE: If they're that concerned...
By RandallMoore on 4/26/2009 10:52:46 PM , Rating: 2
Ya know, just to add my 2 cents here... I love that we now live in a society that when someone makes up an acronym on the spot that involves cursing/violence/irony, we can immediately understand exactly what it is. :D RTFA; lmao.

It's the small things in life that matter...

RE: If they're that concerned...
By Flail on 4/26/2009 11:01:43 PM , Rating: 1
well, it was kind of easy to understand that one at least. The guy he was responding to didn't read the article, so it was something along the lines of "Read the Fucking article"

RE: If they're that concerned...
By Sanity on 4/26/09, Rating: 0
By RandallMoore on 4/27/2009 9:17:39 AM , Rating: 1
I think you are about the only one that understood my meaning. Of course I knew that this acronym already existed; in fact, it would be hard to believe that there is a phrase that hasn't been acronymized (lol) yet!

Some of you guys out there are an absolute buzz kill, geez.

RE: If they're that concerned...
By MozeeToby on 4/27/2009 1:43:12 AM , Rating: 4
Hate to say it, but he hardly made up the acronym on the spot. RTFM (Read the F-ing Manual) has been used in Linux circles for a couple of decades now and RTFA has been in use on a lot of forums (especially Slashdot, where its an on running meme).

RE: If they're that concerned...
By Meinolf on 4/27/09, Rating: 0
RE: If they're that concerned...
By afkrotch on 4/27/2009 10:58:50 AM , Rating: 2
I'm sure that's the case. They should ask Blockbuster and Netflix how many discs they send out get broken. Course, a dvd movie/blu-ray movie is still around 1/2 the price of a game.

RE: If they're that concerned...
By mcnabney on 4/27/2009 11:48:06 PM , Rating: 2
I have used Netflix for about 9 months and have received three disks that arrived snapped in two. So about 3-5% DOA for me. Scratches are worse.

RE: If they're that concerned...
By grandpope on 4/28/2009 11:15:49 AM , Rating: 2
In that case, your dad should be on the lookout for a subpoena to testify in this case!

RE: If they're that concerned...
By energy1man on 4/26/2009 10:09:02 PM , Rating: 4
Link to an article about cracked blu ray disks from Netflix by Wired about a week ago.
One of the postulated causes is automated sorting machines at the post office. While Gamefly may be claiming preferential treatment for blockbuster and netflick, this would suggest otherwise.

RE: If they're that concerned...
By bhieb on 4/27/2009 9:30:38 AM , Rating: 1
Agreed. I don't see where the problem is here. They basically pay for the lowest cost bulk rate that the USPS offers. It is not insured so you are going to have mistakes. If they want better service then pay for it. When you consider that for ~$.40 someone will come to you pick up a product and deliver it to any other person in the lower 48 within a few days, it is pretty astonishing. 1-2% failure rate is acceptable.

And the argument that competitors are getting special treatment, of course they are. The USPS has special bulk rates for bulk customers. The more you send the more you save. Each contract is negociated seperately so if Gamefly does not like the deal go get another one somewhere else. Oh wait they probably can't so quit complaining.

RE: If they're that concerned...
By foolsgambit11 on 4/27/2009 8:46:13 PM , Rating: 2
You need to beef up your critical reading skills.

1. That article specifically refers to Blu-Ray discs because the discs are different than DVD in their makeup, making them more liable to be damaged.
2. Netflix claims their damaged Blu-Ray discs amount to "a fraction of a percent" of total BD rentals, while GameFly's DVD damages are allegedly 1 to 2 percent. A big difference in a low-margin business.

RE: If they're that concerned...
By energy1man on 4/27/2009 9:39:37 PM , Rating: 2
Well the critical aspect would be that the post office is machine processing the netflix packages, not giving them special treatment. Yes the blu ray may be more prone to damage, apparently the damage to both regular and blu ray disks is something netflix is willing to live with with as a cost of doing business, as they don't want to redesign their packaging due to the associated cost. For all we know it may be gamefly shipping process, before it gets to the post office that is daming the disks, as this was also mentioned as a possible cause of the damage to netflix disks

RE: If they're that concerned...
By JustKidding on 4/26/2009 10:32:19 PM , Rating: 2
This sounds like someone's looking for a scapegoat. The Gamefly disks are handled in exactly the same manner and in the same bins and with the same equipment as both Netflix and Blockbuster, who seem happy with the USPS and continue to do business with them. An alternate explanation might be that the customers are accidentally breaking them and rather than pay for damaging the disks, they put them in the envelopes to be mailed so the post office can take the blame. I know that the kids in my family don't always treat the disks very carefully. Also if a small percentage of breakage (regardless of the reason) is a problem they should either get better packaging or use an alternate method of delivery or an alternate carrier. (if they used FedEx they might have to raise their prices just a bit...:P)

RE: If they're that concerned...
By mmatis on 4/26/2009 10:37:27 PM , Rating: 2
Look for... the Union label...

RE: If they're that concerned...
By MadMan007 on 4/27/2009 8:34:43 AM , Rating: 2
It takes a pretty good amount of force to break a disk so breaking them by accident is unlikely - you have to be more than 'not careful.' Another problem I can see for Gamefly is the disks cost ~3x what a movie does. If it's such an issue they should opt for some type of insurance if opssible depending upon how the numbers work out. And from what I gatjher the complaint is that the disks are not handled in the exact same way.

RE: If they're that concerned...
By bhieb on 4/27/2009 9:33:32 AM , Rating: 2
Still their business model, if they want an insured service then pay for one. Bulk US mail is not insured so a 1-2% loss is pretty good I'd say.

RE: If they're that concerned...
By AnnihilatorX on 4/27/2009 7:53:07 AM , Rating: 2
The LOVEFiLM company in UK which I am a customer of has this patented plastic soft rubber case (it even says it's patent pendinng)

I forgot what the material is, but it's extremely scratch resistant.

RE: If they're that concerned...
By afkrotch on 4/27/2009 11:03:23 AM , Rating: 1
You mean like the cases that the dvd movies, blu-ray movies, or games come in when you purcahse them?

Does AOL provide consultants?
By nineball9 on 4/26/2009 8:33:26 PM , Rating: 5
Perhaps Gamefly should ask AOL how to ship discs properly. Of the scads of AOL discs I received in the mail over the years, I don't remember any of them arriving broken.

RE: Does AOL provide consultants?
By someguy123 on 4/26/2009 9:37:57 PM , Rating: 2
well they're talking about 1~2 percent here. this is a relatively small figure, but obviously quite costly at 50$ per disk.

i've never had anything shipped to me broken, but that doesn't mean it never happens.

RE: Does AOL provide consultants?
By Etsp on 4/26/2009 11:38:11 PM , Rating: 2
I seriously doubt that the game publishers are charging full purchase price for another copy of the game medium... Gamefly probably worked it out with them so it's something like $5 to replace a disk, seeing as they already bought the games...

RE: Does AOL provide consultants?
By someguy123 on 4/27/2009 3:50:58 AM , Rating: 2
I'm referring to the article.

RE: Does AOL provide consultants?
By TomZ on 4/27/2009 3:48:48 PM , Rating: 2
I think the author of the article is purely speculating. First of all, do you think that they are paying retail price for each game? I can think of several reasons why they wouldn't be.

Also, do you really think that game publishers are going to charge full (retail?) price for a replacement disc? Remember, the cost is for the software license - the cost of the physical disc is just a small fraction of that.

By Spivonious on 4/27/2009 7:55:28 AM , Rating: 2
If it's anything like renting movies, they're charged a lot more than the retail price since they're also buying a license to rent them. At Blockbuster it came out to around $80 per DVD for movies. I imagine games are over $100/each.

RE: Does AOL provide consultants?
By Hiawa23 on 4/27/2009 8:41:58 AM , Rating: 2
I am a member of Gamefly & Netflix, & I have never received a broken game. I will say one thing. I have been a member of Gamefly since Day1 & love the service. Amazing savings, & saved me $180 last month alone on games I was going to buy but thankfully rented instead. I have received some Netflix Discs broken but this rarely happened. The games can't cost them $50, cause I buy day 1 games for them & they have never been $50, so not sure that is an accurate number, & why would the Post Office show preferential treatment to the others?

By MagicSquid on 4/27/2009 10:35:00 AM , Rating: 4
My AOL discs don't show up broken, but I make sure they leave broken. :)

By foolsgambit11 on 4/26/2009 5:02:10 PM , Rating: 2
To be fair to the USPS, Blockbuster and Netflix are well-known by the masses, and their greater numbers through the system naturally makes employees better at recognizing and separating their discs. On the other hand, there is no excuse for theft, and there's also no excuse for charging Gamefly for a service that it subsequently fails to render, and which leads to the damage or destruction of their discs.

So, partially understandable, partially inexcusable. If those two things aren't mutually exclusive.

RE: Hmm...
By jimbojimbo on 4/27/2009 3:09:00 AM , Rating: 4
There is no separating out of discs. I worked for the USPS for a few years from the main processing centers to the local post office and these days a machine reads the address and sorts them in order of delivery for the carrier. When the carrier receives his mail, most of it is automatically sorted and ready to be delivered. There was and never would be deliberate manual processing by picking them out as you may think.

If you're a Netflix customer like I am, take a look at your envelope. If you see any markings midway down that appears like a scratch or pressure applied horizontally, that means a machine processed it. Why the hell do you think they put barcodes on them? So a person could read that and sort it?

RE: Hmm...
By TomZ on 4/27/2009 3:52:56 PM , Rating: 2
No, I think you're wrong. Actually, USPS has set up a parallel set of high quality machines across its entire automated network for Netflix, and another for Blockbuster. And in addition, they set up another set of low-quality machines leftover from the 1970's that routes Gamefly discs.

Just kidding. Not poking fun at you personally or your post; just pointing out the absurdity of Gamefly's claims.

Probably this is just a ploy for better negotiating power when it comes time for Gamefly to sign a new contract with USPS.

$50 per disc?
By taber on 4/26/2009 10:05:59 PM , Rating: 3
Ars Technica estimates that GameFly could be losing up to $295,000 per month in broken video games, if each game costs $50 to replace and one percent of all games each month are broken.

I really have to question that GameFly has to pay anywhere near full consumer retail for a replacement disc.

RE: $50 per disc?
By IceBreakerG on 4/26/2009 11:38:26 PM , Rating: 1
Well, just like the actual consoles we play the games on, the games themselves don't have a very high markup at all. Which is why even at employee discounts, the games are only like $5-10 (at the most) cheaper.

RE: $50 per disc?
By CascadingDarkness on 4/28/2009 2:04:30 PM , Rating: 2
Most have statement in back of the manual that you can get a physical disc replaced for S&H charge of $10 per.

Key wording in complaint below:
18. A new video game DVD costs GameFly as much as $50 to purchase.
"States New " Doesn't imply replacements are same cost.

I think the main case would be both extra staffing to handle this, and down time getting a replacement.

The point to making money for Gamefly is to have games in hands of consumers as much as possible.

Even if they streamline this process I wouldn't be surprised if damaged disc leads to 1-2 weeks lost rental time. Thousands of discs would make that money add up fast.

By Elementalism on 4/27/2009 9:24:47 AM , Rating: 2
I am sure the USPS and its employee's are taking time out of their day to break gamefly game cd\dvds and handle netflix\blockbuster with care. This is an ogranization that is lucky to get the mail to the correct address 90% of the time. I doubt anybody has the ambition to do what they are claiming.

RE: Funny
By walk2k on 4/30/2009 7:00:24 PM , Rating: 2
I know, it's a ridiculous claim.

"The USPS is breaking our discs! Also the CIA is listening to my brain waves with thier mind control rays!! ABLRLURUUBULBUBU!!"

By jimbojimbo on 4/27/2009 3:03:51 AM , Rating: 2
They want the USPS to manually process everything? Ha! They are completely automated these days and that's what keeps them as efficient as they are now. They've been trying to automate everything in the past decades, even large envelopes and smaller packages. If they want all their items to be manually processed at every level they better expect huge delays or expect to pay more. That's the bottom line.

Netflix and Blockbuster discs go through the exact same machines so there is NO preferrential treatment. That's like telling the commission that the USPS has a special "CD breaking" machine that they only process their discs on. That's ludicrous.

Their complaint should be that game CDs are more brittle than movie CDs. I don't know that for certain but it very well could be the reason for all this.

By AnnihilatorX on 4/27/2009 7:55:37 AM , Rating: 2
If we have a game industry equivalent of MPAA, RIAA
They would hire mean lawyers to aid USPS on their clause so that they can get profit out of replacement disks on a rental industry which they cannot profitize.

By Creig on 4/27/2009 8:02:53 AM , Rating: 2
But I'll be willing to bet that they don't want to have to pay anything extra for the additional manpower this would require.

Although I don't do online rentals, I'm guessing that if Netflix and Blockbuster truly are having fewer destroyed discs that they're also probably using different packaging to send them to/from their customers. If not, I would be highly surprised to see any meaningful percentage difference of damaged packages between all three companies.

GameFly also believes USPS favors Netflix and Blockbuster over its service

Note to Gamefly: Relax and take off the tinfoil hat. The USPS is not singling you out. They are equal opportunity package destroyers.

Netflix upsetting the post office
By nafhan on 4/27/2009 9:00:45 AM , Rating: 2
Somewhat related... back in 2007 (I think) the post office voiced some discontent with Netflix over their packaging.
Netflix's packaging hasn't changed since then and I haven't heard anything about what the resolution to the problem was. Quick Google search didn't seem to yield any answers.
Does Netflix have a deal with the postal service for preferential treatment or something? At the time, it didn't seem like an issue that would just be dropped unless something changed.

By bubba551 on 4/27/2009 11:33:53 AM , Rating: 2
Out of 179 DVDs I have recieved from Blockbuster Online, 3 have been broken in transit. In other words, "between 1 and 2 percent"

Too Many Problems With This Model
By wempa on 4/27/2009 1:18:30 PM , Rating: 2
I had GameFly for a little over 1 year and I can say that there are WAY too many "shipping problems". Too many games either didn't make it to my house, didn't make it from my house back to GameFly or showed up broken. It made me realize just how unreliable this model really is .... at least for games. I hated not really knowing where the point of failure was. There needs to be a reliable way to verify that it left point A and made it to point B. Maybe it works better for movies due to their lower cost. It's easier to take a loss on a $15 movie compared to a $60 video game, especially when multiplied by a few hundred thousand.

That's what you get for...
By Shig on 4/26/09, Rating: -1
RE: That's what you get for...
By Hyperion1400 on 4/27/09, Rating: -1
RE: That's what you get for...
By jimbojimbo on 4/27/2009 3:13:40 AM , Rating: 3
That's like complaining after you've mailed a box of wine glasses in an envelope and it arrived broken. Poor packaging is poor packaging. Instead of complaining they should work with the USPS to see what type of packaging would be ideal.

RE: That's what you get for...
By OAKside24 on 4/27/2009 10:46:17 AM , Rating: 2
Not really. Only 1% of the discs break (bad packaging: improbable), but your example is quite opposite in that MOST of your wine glasses would break (bad packaging: probable).

Last time I checked, GameFly packaged the discs inside a sleeve AND cardboard piece. Better packaging than Netflix and Blockbuster (which I attributed to extra safety with expensive game discs), but apparently the 1% breakage is higher and/or unacceptable.

RE: That's what you get for...
By wempa on 4/27/2009 1:24:37 PM , Rating: 2
Yes, you're right. They do use (or at least DID use) a cardboard insert as well. The game is secured in the middle between 2 cardboard sides. The envelope is not big enough for the game to slide out of it. I wonder how the heck these games are getting broken then. You'd have to use a lot of force to bend the cardboard and break the disc. Very weird.

RE: That's what you get for...
By MadMan007 on 4/27/2009 8:43:06 AM , Rating: 2
Shipping insurance does not ensure your package arrives any more than auro insurance ensures you won't have an accident. You need to review the purpose of and liability coverage of shipping insurance.

One day...
By splint on 4/26/09, Rating: -1
RE: One day...
By dflynchimp on 4/26/2009 5:30:04 PM , Rating: 5
Small correction. We on the user end have already realized that very fact.

It's the ISP that are now trying to wring more money out of high bandwidth users and/or potential digital rentees by applying tiered internet service.

In reality, internet service in the U.S is already far behind the service in Japan and Europe, thanks to stagnant ISP management (otherwise known as money grubbing Whoars). Now they want us to carry the cost of modernization.

This is one area that I really think the government should step in and correct.

RE: One day...
By afkrotch on 4/27/2009 1:04:54 PM , Rating: 2
If you think US is far behind Europe in internet service, you obviously have never lived in Europe. I've lived in England and currently in Germany. They're about the same. Sometimes worse in Europe, as sometimes one single ISP has a monopoly for the country.

So while there can be more ISPs in an area, there's no competition, as that ISP is stuck using the monopoly ISP's infrastructure. Thus, they have to pay them a fee for usage and that charge goes to the consumer. You can end up with slower service and higher cost.

Like here in Germany. Deutsch Telekom is the monopoly. TKS is another ISP. Best service from TKS is a 6 meg line and a phone for about 50 Euro. Deutsch Telekom on the other hand is a 16 meg line and a phone, for about 50 Euro.

Luckily, those in a larger city have cable companies they can turn too. I can get Kabel Kaiserslautern. 30 meg line for about 50 Euro. No phone though. Those in surrounding villages are stuck with Deutsch Telekom or another DSL ISP that uses their lines anyways. Not to mention, the small villages have waiting lists. You literally have to wait for someone else to cancel their service for you to get your own service.

RE: One day...
By dflynchimp on 4/27/2009 1:37:31 PM , Rating: 2
Extremes do exist whereever you go. All of the faults you list with Europe's ISP can be found somewhere in the states.

But I agree with your point that it's the monopoly that ISP's have on their users that grant them such power.

RE: One day...
By chmilz on 4/26/2009 5:55:53 PM , Rating: 5
One day we will all look back and laugh at how monopolistic bandwidth providers attempted to stifle the evolution of data delivery for pure greed .

Fixed that for ya.

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