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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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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

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