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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 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.

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