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Battle continues between Gamefly and USPS

by on14 October 2009


Gamefly claims that others get special treatment

The ongoing legal tug-of-war between Gamefly and the U.S. Postal Service continues, with Gamefly producing more evidence that the USPS has been giving both Netflix and Blockbuster preferential treatment in the way that their mailers are processed.

While the USPS claims that Gamefly would get the same treatment if they would change their mailers, this suggests that not all mailers are treated equally. Gamefly is working hard to deal with this problem, as the company is trying to curb the number of broken discs (which continue to be a problem) for the mail-rental outfit, as they are spending as much as $50 to $60 for some titles that are sent out to members.

When discs are returned damaged, Gamefly is left with little choice other than to eat the cost; and this has presented a problem for the retailer, as the cost of many video games can be as much as double the cost of a Blu-ray disc, and as much as several times the cost of a single DVD (which, of course, eats into the company’s profitability and bottom line). Gamefly claims that Netflix, for example, is getting special treatment by the USPS, which is contributing to Netflix having a reduced breakage problem.

Gamefly has gone on to prove their point by introducing pictures of slots at USPS locations that were labeled as “Netflix Only,” and while the USPS claims that they have issued directives to have any such slots removed due to the potential legal ramifications, it seems that either someone missed some or didn’t listen to the directive. It will be interesting to see whether or not the USPS is able to explain this away.

Many analysts believe that Gamefly’s ability to win this case could have long-term ramifications on the mail-order rental business in the long term. If Gamefly were able to prove that the USPS is, in fact, contributing to a 1% breakage rate and that Gamefly’s packaging isn’t to blame, things could really get sticky for the USPS.

Last modified on 14 October 2009
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