One Year Later, USPS Looks Into Gamefly Complaint

Last April, we discussed news that video game rental service GameFly had complained to the USPS that a large quantity of their game discs were broken in transit, accusing the postal service of giving preferential treatment to more traditional DVD rental companies like Netflix. Now, just over a year later, an anonymous reader sends word that the USPS has responded with a detailed inquiry into GameFly's situation (PDF). The inquiry's 46 questions (many of which are multi-part) cover just about everything you could imagine concerning GameFly's distribution methods. Most of them are simple, yet painstaking, in a way only government agencies can manage. Here are a few of them: "What threshold does GameFly consider to be an acceptable loss/theft rate? Please provide the research that determined this rate. ... What is the transportation cost incurred by GameFly to transport its mail from each GameFly distribution center to the postal facility used by that distribution center? ... Please describe the total cost that GameFly would incur if it expanded its distribution network to sixty or one hundred twenty locations. In your answer, please itemize costs separately. ... Does the age of a gaming DVD or the number of times played have more effect on the average life cycle of a gaming DVD?"

Comments

Is it me?

[topham]

Is it me, or is GameFly being dicked around?

Some of the questions look valid, but others are completely obtuse and look like they are designed to waste GameFly's time and resources, not resolve the problem.

Re:Is it me?

[stephanruby]

Some of the questions look valid, but others are completely obtuse and look like they are designed to waste GameFly's time and resources, not resolve the problem.

I agree. That being said, as a Netflix customer, I can pretty much testify to the fact that my mail man used to break an awful lot of DVDs trying to shove them in my mailbox and then try to close it (so he could get back his keys, I live in a four apartment building so it's a set of four mailboxes he opens together). It became such a problem, I took down my subscription from 4 DVDs to only 1 DVD at-a-time. Usually, it's when there was more than one DVD in there, that at least one of them would break (or at least warp so badly, that it became completely unplayable).

One fix would have been to ask my landlord that he install a bigger set of mailboxes, but the space in the brick wall is so limited, that any change would become a major construction project to replace anything (so I didn't even ask). Another fix is to try to talk to the mail man, but for some reason, my route is not considered a good one (although, it's still a good neighborhood), so it's nearly a different person delivering the mail every week. Another fix would be to have an additional mailbox made especially for DVDs (that, assuming there was an easy way to attach it to my existing mailbox, I would buy in a jiffy).

Re:Is it me?

[91degrees]

Given that Gamefly is losing millions here, relatively speaking, it's not going to be a major pain for them to answer these questions. It makes sense to be thorough.

Re:Is it me?

[iamhassi]

"Is it me, or is GameFly being dicked around?"

Without a doubt. GameFly basically said last year "Look dude, you keep breaking my shit and you handle my competitors shit with silk gloves. WTF?"

USPS responses a year later with "We don't know what you're talking about. We want copies of all research on all mailer designs you've tested, including the results of each test and what advantages or disadvantages were found and the research used to determine these advantages or disadvantages."

USPS even accused GameFly of stealing their own games:
"Please describe any measures GameFly undertakes to manage or limit theft. In your answer please include the anti-theft procedures utilized in GameFly’s own plants and during transit of GameFly mail to and from postal facilities."

W...T....F.... USPS are you serious? So, if I call you and say "hey my mail keeps disappearing" are you going to tell me "what are YOU doing to stop it?"

And like the article says, some of these questions are just ridiculous, like: "USPS/GFL-28. Please describe the total cost that GameFly would incur if it expanded its distribution network to sixty or one hundred twenty locations. In your answer, please itemize costs separately."

So USPS wants them to just figure out how much it would cost to expand to 60 or 120 locations, and then give them a itemized cost of doing so? That alone could, if done realistically, take hundreds of man hours, to determine where these 60 or 120 locations would be best located and the cost opening up a new facility in each of those areas.

USPS even wants GameFly to analyze the material DVDs are made of:
"USPS/GFL-30. Has GameFly conducted any testing related to materials used in the DVDs it distributes or that it is aware respective manufacturers have undertaken? In your answer please describe the tests and any results from the tests, including breakage rates for the materials tested."

This is a giant middle finger from USPS to GameFly if I've ever seen one.

USPS, you didn't have to be such an ass, a simple "Ok we'll give you the same treatment as Netflix and Blockbuster" would have been the right thing to do.

Re:Is it me?

[Anonymous Coward]

find a stranger in the Alps

Re:Is it me?

[Hurricane78]

Sounds like the definition of a government agency to me. ;)

Re:Is it me?

[stephanruby]

Or get your lazy ass out of the house and use a USPS drop box. Just sayin'

a drop box? I think you misunderstood. It gets broken when I receive it, not when I send it back.

Re:Is it me?

[tophermeyer]

W...T....F.... USPS are you serious? So, if I call you and say "hey my mail keeps disappearing" are you going to tell me "what are YOU doing to stop it?"

Regarding this point, I think this is pretty much a USPS standard policy. I have had two separate instances where packages delivered through USPS have gone missing. USPS claims they were delivered, I never received them. On both instances, I had the same kind of response from them, and it didn't really surprise me. After all, they are leaving video game disks in mailboxes that are frequently not secured. It seems logical that there are people in the world that will steal those disks, and it also seems logical that USPS would not feel inclined to take responsibility for that. Its crappy customer service for sure, but I can understand the thinking.

GameFly disks come in a largish stiff cardboard packet that does not bend. Netflix disks come in similarly sized paper envelopes that do bend around the corners. Netflix mailings are relatively easy to stuff into a small mailbox because they literally have a footprint the size of a DVD (small). GameFly's mailings are not nearly as flexible, so again it does not surprise me that USPS is questioning why kind of research GameFly conducted to determine that this package was the most appropriate.

Re:Is it me?

[Myopic]

Yeah, it definitely fits the stereotype of a government agency.

But, to be clear, the USPS is not a government agency. Like Major League Baseball or Fannie Mae, it is a private agency which has a special relationship with the government.

Re:Is it me?

[Dishevel]

why the fuck would you suggest a solution that requires one to go out and get something out of a PO box when the service he is using is there so he doesn't have to go out and rent a DVD?

Re:Is it me?

[PalmKiller]

No, semi quasi true, but no on the profit... Until 1970, the U.S. Postal Service functioned as a regular, tax-supported, agency of the federal government. Now, under the Postal Reorganization Act of 1970, the U.S. Postal Service is a semi-independent federal agency, mandated to be revenue-neutral. That is, it is supposed to break even, not make a profit.

Re:Is it me?

[JesseMcDonald]

If the answer is no, then they are, by definition, not a "for-profit company".

So your definition of "for-profit company" excludes non-publicly-traded organizations, such as sole proprietorships and private partnerships? How interesting. Here I was thinking that "for-profit company" meant any company not formally classified as a non-profit organization. Or, more generally, any organization formed for the purpose of obtaining an economic profit through commerce.

The real question seems to be whether the USPS would qualify as a non-profit organization. As to that, I have no idea. Perhaps they would. Most of the proceeds do seem to be re-invested into the operation of the postal service, rather than simply accumulated or distributed back to the nominal owner (the federal government). On that score they would be considered a non-profit, to be best of my understanding, but there are other considerations with which I am not familiar.

Re:Is it me?

[PalmKiller]

Now I did say supposed to break even, but as of late, they are turning a net profit in the low billions range each year...so it makes you wonder why the price of stamps keeps going up...something smells very fishy.

Re:Is it me?

[Dragonslicer]

So your definition of "for-profit company" excludes non-publicly-traded organizations, such as sole proprietorships and private partnerships?

Sorry, that probably should have read "are the answers to both questions no?" For a sole proprietorship, that person would effectively be the CEO. I certainly didn't intend to limit my definition to publicly traded companies that name the person-in-charge "CEO". For private companies, you can substitute "owners" or "investors" for "shareholders".

Here I was thinking that "for-profit company" meant any company not formally classified as a non-profit organization.

Nope, there's also the "not-for-profit" classification. I may be wrong on this, but "non-profit" is used for organizations that are basically charities. Food banks, homeless shelters, cancer research organizations, etc. would be non-profit. "Not-for-profit" is for organizations that clearly aren't charities, but that don't have owners, executives, or shareholders that get extra money at the end of the year. Places like research labs that are spin-offs of universities (MIT has a few around Boston) are often not-for-profits. The USPS would probably be considered such a not-for-profit.

Re:Is it me?

[DavidTC]

Dude, just making stuff up doesn't make it true.

A drop box is a public or semi-public send-only mailbox that anyone can put stuff in.

It has nothing to do with how you get your mail, you idjit. You can use a drop box and have a PO box, you can use one and have a normal mailbox (I do this, especially with sending checks, if I'm going to town anyway. A dropbox at a mall is much safer than leaving it in your mailbox with a flag up.), you can use one and collect at general delivery, you can use one without any ability to be mailed back at all. (I wonder what you put on the return address if so?)

Now, if you have a PO box, you don't have a private sending box, so you essentially either have to use a public dropbox (Probably the one right at the post office.), or hand it in to a person at the post office, or catch a mailman walking by.

But the fact that people with PO boxes tend to use dropboxes doesn't mean they are, in the slightest way, related, and dropboxes certainly aren't a form of PO box.

Re:Is it me?

[Dishevel]

Thanks for calling me an illiterate fuck. The really special thing about that insult is the part where you prove that you did not comprehend the very post you were replying to.

Awesome. Can you do some more please?

netflix vs gamefly

[steppin_razor_LA]

funny since gamefly's disks are wrapped in rigid cardboard and much more secure than netflix...

Re:netflix vs gamefly

[blackraven14250]

I don't know about Gamefly, but if they're in cardboard, they should be much better off than Netflix. Netflix's shipping method involves about 4 sheets of paper, not even glued together.

Re:netflix vs gamefly

[Sycraft-fu]

Well couple things may be in play, other than the USPS being meanies:

1) Netflix may well consider a fairly high rate of loss acceptable. Depending on the prices they have to pay for the discs, it might not matter to them. Remember that the media itself is cheap. In large runs I'd be surprised if you could get a disc to cost $0.10. So if they have a situation with the studios where they can buy the discs cheap, separate of the rental rights, it might not matter to them.

2) Video discs may be able to take more damage. If there's an error on a video disc, it isn't necessarily a show stopper. Could manifest as a minor visual glitch, maybe a couple frames get dropped. Whatever, movie still works, most people won't bitch. With data DVDs, doesn't work like that. Either everything reads 100% and passes the verification or it says "Shit is broke, we can't install."

Not saying the post office might not be causing problems, but there are plenty of other possibilities. Netflix may have accounted for breakage in their business model and Gamefly may not have

Re:netflix vs gamefly

[Dthief]

35. GameFly is not the only mailer to experience significant DVD breakage rates on automated mail processing equipment. In response to this phenomenon, the Postal Service has adopted a practice of manually culling out the DVD mailers of two high-volume shippers of DVDs, Netflix and Blockbuster, for special processing.

Re:netflix vs gamefly

[Artifex]

Well couple things may be in play, other than the USPS being meanies:

1) Netflix may well consider a fairly high rate of loss acceptable. Depending on the prices they have to pay for the discs, it might not matter to them. Remember that the media itself is cheap. In large runs I'd be surprised if you could get a disc to cost $0.10. So if they have a situation with the studios where they can buy the discs cheap, separate of the rental rights, it might not matter to them.

They also have arrangements (or have had in the past) where they ship DVDs they printed themselves. In situations like that, they could be even cheaper, because there's no delay in waiting for replacements from the vendors, and they could be printed at the distribution centers nearest the subscribers asking for them.

Re:netflix vs gamefly

[Anonymous Coward]

I think you have to rule out #1. Netflix has to buy the discs retail from the studios, just like Blockbuster and others must. They do not get anywhere near a $0.10/disc cost. Think closer to $25. You can thank the death grip of old media for that.

Netflix has 89,000,000 discs in inventory and had revenues of $1.67 billion in 2009, so each disc could be seen as producing $18 in revenue, statistically (more on that below). Given that most Netflix customers have the "3 at a time" plan (at $17/month), and that they hold onto discs for an average of 10 days, that means a disc must be rented roughly 4-5 times for the disc to earn enough "allocation" of customers' plan revenue to break even, and that for the average disc this may take a year and a half.

Even if studios gave Netflix a sweetheart deal, I think they'd still need a minimum of 6 months of circulation to break even on your "average" disc.

But there is no "average" disc. What really happens is that there is a long tail of low popularity titles, with accordingly low inventories, and the newest titles are most popular/profitable and pay for the carrying costs of the remainder of their 100,000+ movie library.

But this is all for naught if the disc can't make it through the mail (and customers' homes) at least 5 times without being stolen or damaged, no matter how long that takes.

So Netflix would seem to care about mail damage, too.

Sources: Wikipedia, Feedflix

Re:netflix vs gamefly

[ktappe]

funny since gamefly's disks are wrapped in rigid cardboard and much more secure than netflix...

Which makes them larger and therefore more likely to be difficult to fit into some mailboxes. That makes them more likely to be bent by mailcarriers, leading to damage. This is something GameFly probably needed to put more R&D into and on that point, score one for the USPS.

Re:netflix vs gamefly

[bws111]

One thing you can be sure of is that Netflix and Blockbuster are NOT paying retail. They are not going down to the local Best Buy and purchasing 1000 copies of some movie. Unless you have some info to the contrary, we don't know anything about their arrangement with the studios. It could be that they get the disks for free, and pay the studios a fee every time a disk goes out. Since they are also able to offer movies on-line, they obviously have some arrangement other than 'buy a retail disk'.

predictable

[Goldsmith]

Welcome to the world of lawyers, where it doesn't matter who is right and who is wrong, but who is in a position to be a bigger pain in the neck. This is a discovery document for the defense of USPS, not a response to an inquiry. They probably won't be issuing a response.

The USPS lawyers (in the odd world of legal ethics) probably concluded that the "right" thing to do is to pressure Gamefly to settle and admit no wrongdoing by USPS. I'm sure there are good reasons for USPS to not actually put out a public report detailing what their definition of acceptable mail handling is or how poor mail handling happens, but those are good reasons only for people who work for USPS.

Re:predictable

[mpoulton]

Welcome to the world of lawyers, where it doesn't matter who is right and who is wrong, but who is in a position to be a bigger pain in the neck. This is a discovery document for the defense of USPS, not a response to an inquiry. They probably won't be issuing a response.

The USPS lawyers (in the odd world of legal ethics) probably concluded that the "right" thing to do is to pressure Gamefly to settle and admit no wrongdoing by USPS. I'm sure there are good reasons for USPS to not actually put out a public report detailing what their definition of acceptable mail handling is or how poor mail handling happens, but those are good reasons only for people who work for USPS.

The original "inquiry" was not a polite request for the USPS to investigate. It was a formal complaint filed with the Postal Regulatory Commission. This is functionally a lawsuit, in the "court" of the Postal Regulatory Commission. GameFly sued the USPS demanding that they provide the same treatment to GameFly DVDs that is provided for Netflix and Blockbuster DVDs. The Postal service's response here is a discovery request, which is to be expected. However, if you read the original complaint it becomes apparent that the postal service probably already has much of this information, since the USPS and GameFly worked together for quite a long time to resolve the problem (to no avail).

Did they try to work it out or just FILE FILE FILE

[Alpha232]

Alot of the questions go to what effort did GameFly invest into research, planning and execution, of the shipping and return process.
Things from the material the mailer is produced from to simply how the dvd is secured inside the envelope to prevent shifting through the sorting process.

And the really big question, are you sure they really were "stolen" and not just kept.

I think pretty much all of the questions are valid and while written in legaleze, quite understandable given the severity of the complaint. If GameFly worked with the USPS in planning the mailing portion of their service and co-operated in tracking down these "thefts" before filing this case, then they should have no problems answering every one of them honestly and fully.

Aussie Post Works Their Magic Too

[GumphMaster]

I am amazed at the sheer skill displayed by postal services in breaking CDROMs. Australia Post has broken the last couple I have mailed. The disc is in a paper sleeve glued to the inside of a 10mm thick A4 paper manual inside a heavy paper "Toughbag" envelope. The envelopes and manual arrive with no outward signs of distress but the CDROM has been broken cleanly in two. One went to the far side of the country, but the other only a few suburbs away.

You can grab a bare CD and bend it in half without physically breaking it... it takes compressive force on the fold before the CD shatters. How this happens in transit without damaging the containing envelopes beats me.

Re:Aussie Post Works Their Magic Too

[pimpsoftcom]

Because mail is sorted through machines that bend all mail.. its industry standard and part of the automated sorting racks that read the digital stamp placed over the actual stamp, based on the USPS employee I talked to.

Re:Aussie Post Works Their Magic Too

[GumphMaster]

CDs survive summertime closed car temperatures (i.e. 60+ Celsius) repeatedly without breaking. Repeated dropping on an edge could do it but the impact would have to smash through the surrounding manual first, retain sufficient energy to break the CDROM, and not damage either the manual or envelope. Both options seem unlikely.

Re:Aussie Post Works Their Magic Too

[ffflala]

It's the difference in the elastic modulus among materials. The envelopes, manual, and cardboard packaging have different properties from the encased plastic discs. Opposing shear forces with small enough clearance could easily snap a CD/DVD in the middle, without leaving any particularly unusual bend or mark on the external plant-pulp packaging. If the tire and road surfaces were flat and clean enough, a loaded semi could drive over a piece of mail without harming it; not so for the disc.

Re:Did they try to work it out or just FILE FILE F

[Alpha232]

From the original complaint, the USPS apparently does treat them differently as far as machine handling... it would be interesting to see what happens.

The issue here is why does GameFly have to jump through hoops and spend alot more on packaging to survive automation even when the class of service they used allows for non-machine sorts, while the other companies get separated for special treatment.

Re:Real Reason is Game Disks Are More Valuable

[lindoran]

USPS is a government run company (for all intents an purposes). As such they do not need licence plates. They do however have (quite large) identifying numbers on the outside of the truck/vehicle. if it is a small post office they may do mail delivery from the post masters own personal vehicle but in that case there would be some identifying marks on the vehicle. most post offices too small to have fleet vehicles are pick up only however... and in that case there is no vehicle.

Well, I can attest to the losses

[AnswerIs42]

When I use to have a gamefly account, I would loose 3 out of every 5 disks in transit (had something like 30 games not show up over the 5 years I had an account). I would get ripped open envelopes that were taped shut.. I had cut open ones show up. I had one envelope show up so badly mangled they put it inside another envelope. ALL of them had the disks missing.. sometimes I would get the empty game holding envelope.

I looked into the transfer route after the first few are missing.. Gamefly center -> receiving office -> transfer location 1 -> transfer location 2 -> local post office

The post office tried to tell me that is was AFTER the mail was delivered that the thefts happened. I had a PO Box... so that still tells me it is within the system they went missing.

When gamefly went to the current packaging, the missing disk numbers did drop back to 1 in 10 or so. but when they did go missing, I would not even get an envelope in the mail.

Re:"Destinating"

[bws111]

What exactly is wrong with that? It's called defining your terms, and is quite common in legal documents. I would much rather read a document that had terms defined like that at the beginning than one that was full of do/did, each/every, thing(s), and/or, any/all ... "Did/do you ship any/all games(s) and/or movie(s)?"