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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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$50 per disc?
By taber on 4/26/2009 10:05:59 PM , Rating: 3
quote:
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:
quote:
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.


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