GameFly Complains USPS Favors Netflix
Print
Like Netflix, GameFly sends discs out to subscribers by mail. The only difference is GameFly deals with videogames, and Netflix deals with movies and TV shows. So if the two services are so similar, at least in terms of their by-mail rental model, why then does the United States Postal Service give Netflix better rates than GameFly? That's the question David Hodess, president and CEO of GameFly, is demanding to have answered.
The initial complaint of favoritism actual dates back to 2009, in which GameFly filed a complaint with the USPS accusing it of giving Netflix mailings priority over GameFly mailings, and better rates to boot. GameFly wants the complaint to be resolved.
"GameFly filed this complaint nearly two years ago. Before that, GameFly spent 18 months working with the Postal Service in an attempt to informally resolve the issues on which the complaint was based," Hodess wrote (PDF) to the Postal Regulatory Commission.
This isn't a minor issue. According to GameFly, "at the company's current volume of approximately 1.2 million shipments per month, the difference between the two-ounce flat rate of $1.05 that GameFly must pay to avoid automated letter processing for most of its DVD mailers, the one-ounce letter rate of $0.44 that Netflix pays to avoid automated letter processing of return mailers amounts to about $730,000. This amount represents more than 100 percent of GameFly's monthly net income in 2011."
According to Arstechnica, even though the media is the same, GameFly and Netflix mail discs in different ways, and at a different scale. Whereas Netflix has 58 shipping locations, GameFly has just four. In addition, Netflix uses bright red mailers that are easy to sort, and GameFly uses packaging that blends in with other mail to avoid theft. You can read more of the differences here.
Image Credit: GameFly
Tags:
More like this
DustDiesel
March 28, 2011 at 8:45pm
I think gamefly is awesome. If USPS isn't giving them the same ship transit times and priorities I would be pissed. Volume discount should be given within reason. If netflix is getting it for half the price or better, again, I would be pissed but only getting a small discount over gamefly for enhanced volume is reasonable.
Then again, sucks they don't really have anyone else that they can turn to.
Pyrophorics05
March 29, 2011 at 7:35am
Why would you be pissed? It's not like they would transfer the savings onto the customer, especially since people are already paying the current price.
You must be a Gamefly employee.
Strayz
March 28, 2011 at 4:53pm
If Gamefly had millions (not 1 point something) of cd's shipped a month they might get the same rates. Volume matters and it is why netflix gets the discounts it does. Simple answer for them, ship more things out there then you too will get the better rates. How do people manage to run companies when things like this come up? Come on CEO's think things through before you make the comments...
Strayz
March 28, 2011 at 4:53pm
If Gamefly had millions (not 1 point something) of cd's shipped a month they might get the same rates. Volume matters and it is why netflix gets the discounts it does. Simple answer for them, ship more things out there then you too will get the better rates. How do people manage to run companies when things like this come up? Come on CEO's think things through before you make the comments...
IFLATLINEI
March 28, 2011 at 1:07pm
In fact their only reason for continueing to exists is because of Netflix and Gamefly.
Seems logical to me though that seeing as though Netflix ships alot more discs than Gamefly they would get a bulk discount. If Im wrong who cares read my first sentence.
Pyrophorics05
March 28, 2011 at 1:02pm
Yeah, I understand it's a companies job to worry about the bottom line but when I saw this I immediately thought it was in reference to their abysmal ship times till I read further.
SleepyCatChris
March 28, 2011 at 10:21am
"The only difference is GameFly deals with videogames, and Netflix deals with movies and TV shows." No, that's not the only diffence, which you kind of point out further down. Of course Gamefly should pay more, they use heavier, less easy to see, square mailers that can't be nearly as easily sorted as Netflix mailers. gamefly can change their mailers to pay less, but are choosing to keep their more expensive mailings. Not sure why they think the cost of more stolen and damaged game discs would be anywhere near the $750,000 a month they pay in postage.
aarcane
March 28, 2011 at 10:16am
I don't blame gamefly for being upset, but I also don't blame the USPS for giving a good bulk rate to netflix, who clearly has a far higher bulk...
also what about gamefly UMD titles? the irregular shape must be harder for the USPS' equipment to handle in an envelope. Now if Gamefly came out with a big red <1 oz envelope, when loaded with a DVD, and still didn't get the 1oz rate, then I'd be wondering "wtf".
Hot on MaximumTech
Connect with MaximumPC
Featured Content
Free and easy to use, pixlr-o-matic provides PC users with much of the same...
For those of us who prefer our time in front of the tube stimulate,...
The latest version of Microsoft Surface could have what it takes to be the next...
This month's issue
Most Commented Articles
Latest Max PC Tweets
- maximumpc: Viacom Sues Harmonix Shareholders for $131 Million--just $18 million less than it paid for the dev in 2006. http://t.co/iYYVHW0o16 hours 14 min ago
- maximumpc: Think Inside the Box: The Ultimate NAS Showdown http://t.co/G6A6yBfc17 hours 40 min ago
- maximumpc: Chrome Web App of the Week: pixlr-o-matic http://t.co/TAJkYpCi18 hours 46 min ago
