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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: 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?

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