GameFly pushes USPS on Netflix favoritism

PHYSICAL: Postal Service tells retailer to change mailer for better handling

By Danny King -- Video Business, 10/12/2009

OCT. 12 | PHYSICAL: GameFly is trying to get more information from the U.S. Postal Service on what the videogame rental service says are special Netflix-only post-office drop boxes. GameFly, which is trying to build a case against the postal service, alleges special treatment for competing packaged media companies such as Netflix and Blockbuster.

Closely held GameFly last month filed a motion to compel the postal service to answer questions about photos showing "Netflix only" mail slots at two California post offices. The postal service has denied giving Netflix special treatment.

GameFly in April filed a complaint against the U.S. postal service alleging that Blockbuster and Netflix get preferential treatment relative to the online videogames retailer that allows for the largest U.S. movie-rental chain and movie-rental service via mail to have a lower percentage of discs damaged during mailing.

GameFly, which rents videogames to subscribers from its Web site via mail, said in the lawsuit that the postal service manually culls many of the DVDs Blockbuster and Netflix send to subscribers by mail from the post office's automated systems in order to cut down on breakage, but has denied GameFly's request to do the same.

The U.S. Postal Service denied GameFly's claims the following month, saying that GameFly's postage handling is similar to that of other DVD companies and that GameFly would be able to receive the automation postage handling it seeks by changing its mailers. HackingNetflix.com wrote about the case.

Founded in 2002, GameFly, which carries more than 6,000 videogame titles and doesn't disclose annual sales, said in April that its monthly mail volume has more than doubled in the past two years to about 600,000 discs. Because GameFly ships its game discs with protective inserts, the postal rate for a one-way shipment is $1, more than double the 42¢ first-class mail rate, making shipping expenses substantial because of GameFly's unlimited rental plans.

The company offers four subscription plans ranging from$15.95 to $36.95 a month.