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Ruling Confirms Postal Service Discriminated Against GameFly

An anonymous reader writes "It took almost two years, but the US Postal Regulatory Commission just ruled (PDF) that the US Postal Service '...had unduly discriminated against GameFly.' GameFly recently complained that the additional postage was costing them $730,000 per month."

17 of 152 comments (clear)

  1. GameFly? by Anonymous Coward · · Score: 3, Insightful

    I think, by definition, a summary should give people an idea of what the article is about. The summary doesn't tell me:

    1. Who is GameFly and what do they do?
    2. What the discrimination entailed? Did it just cost them more money to send postage?
    3. If GameFly recently complained, then surely it couldn't have taken 2 years?

    So many questions, if only I read TFA...

    1. Re:GameFly? by dingfelder · · Score: 5, Informative

      good questions.

      FTA, Gamefly, the popular video game rental service that operates through the mail, has filed a complaint with the Postal Regulatory Commission about the high number of games that are lost or stolen in the mail.

      The complaint (PDF) asserts that the postal service's automated sorting machines have a tendency to break a small percentage of discs, and that preferential treatment is given to DVD rental services like Netflix and Blockbuster.

      "According to Gamefly's numbers, it mails out 590,000 games and receives 510,000 games back from subscribers a month. The company sees, depending on the mailer, between one and two percent of its games broken in transit. ... Even if you assume the number is one percent, and a game costs $50 to replace, that's an astounding $295,000 a month in lost merchandise. ... That's not the only issue — games are also stolen in transit, which has lead to the arrest of 19 Postal Service employees."

      It took almost 2 years, but the US Postal Regulatory Commission just ruled that the US Postal Service "...had unduly discriminated against Gamefly." Gamefly recently complained that the additional postage was costing them $730,000 per month.

      From the Order on Complaint filed today by the PRC (the full report is interesting reading, if you're into that sort of thing):

              In this latter section, the Commission confirms evidentiary rulings made by the Presiding Officer; finds that GameFly is similarly situated to Netflix and Blockbuster; concludes that Netflix and Blockbuster have been given a number of preferences, including various forms of manual processing coupled with the avoidance of the non-machinable1 Complaint of GameFly, Inc., April 23, 2009 (Complaint).Docket No. 2009-1 Executive Summarysurcharge; and determines that the Postal Service has failed to present adequate and legitimate justifications for these preferences.

              [1004] DVDs returned by subscribers to Netflix in its prepaid letter-sized mailers are non-machinable, and are frequently damaged or cause machine jams. DVDs returned by subscribers to GameFly also are damaged from processing on automated letter processing equipment. The Postal Service separates and hand processes a substantial proportion of Netflix’s returns without imposing a non-machinable surcharge. The Postal Service is unwilling to hand process GameFly’s returns causing GameFly to incur an additional ounce charge on its mail, which the Postal Service refuses to waive.

              [1005] To remedy this unreasonable preference, the Commission orders the Postal Service to establish two parallel rate categories within First-Class Mail for round- trip DVD mail. One category establishes that DVDs sent as presorted First-Class Mail letters to subscribers will not be subject to the non-machinable surcharge when returned. The other rate category provides that DVDs mailed as First-Class Mail flats to and from subscribers will not be subject to an additional ounce charge.

      The PRC order gives the US Postal Service 60 days to comply with the order.

  2. Re:Just in time to close up shop. by Anubis+IV · · Score: 4, Insightful

    Besides game rentals, which is Gamefly's bread and butter industry, they also make a decent amount by selling used games. Their sales are regularly featured as some of the best on the 'net over at CAG. They don't really sell new games, so until physical copies of games disappear (which may only be a console generation away), they should be fairly resilient. This change just makes them more profitable, but again, they are in a dying market, so unless they position themselves to survive it, as GameStop is trying to do by making some purchases of game streaming services, they won't be around in 10 years.

  3. Discrimination? by Ventriloquate · · Score: 3, Interesting

    Is this discrimination against Gamefly or favoritism of Netflix?

  4. Re:Just in time to close up shop. by mcvos · · Score: 2

    Maybe not Nintendo, Sony or Steam, but full-price rentals are very popular with the likes of EA and Ubisoft.

  5. Re:Just in time to close up shop. by flimflammer · · Score: 2

    Gamefly is primarily a console game distributor. Nintendo only distributes Wiiware/similar titles online, Sony is mostly the same for their own network, and Steam is only for PC games.

    The point he's making makes no sense whatsoever. Gamefly's market is virtually untouched by all of these services.

  6. Re:Just in time to close up shop. by temcat · · Score: 2

    The same applies to "copyright infringement is theft".
    Anyway, copyright itself IS much more similar to theft because it implies infringement on physical property rights.

  7. Re:Just in time to close up shop. by Anarki2004 · · Score: 4, Insightful

    Uh...really? Because I think that would result in a lower balance in my account. Now, I could be wrong about this (I feel like i have to point out my sarcasm here), but those numbers in my bank account represent physical money that I can withdraw at any time. I'm not saying that everybody should be free to copy games and movies all they want, but that it doesn't liken to the proper definition of theft when I copy the items in question. I don't know why I'm responding to this...we've seen this argument here a zillion times.

    --
    The teachers will crack any minute, purple monkey dishwasher.
  8. Re:Just in time to close up shop. by Charliemopps · · Score: 2

    Not everyone lives in an area with broadband. Until they do, Gamefly has a huge built-in audience. It's rather comical to see people from urban areas comment on such things as if the rest of the world lived just like them.

  9. Just let the USPS die already by drinkypoo · · Score: 2

    It cannot exist without raising fees year to year and dicking people around.

    My local postmaster is a totally uncommitted douche who will stand around and yak with a pal while there's a line six deep. I know, because I've gone through that line while he did it and I could hear every word of his entirely personal conversation.

    My local carrier has been changed up repeatedly and now I have a couple of them, one is okay, the other is a douche who can't go up and down my driveway without sliding around in a Jeep despite the fact that every FedEx driver and one of my two UPS drivers can make it in their poorly designed box trucks (poor for the country, anyway) without any difficulty.

    Finally, about 90% by number or 99% by volume of the mail I get is spam. Do you have any idea how many trees are cut down yearly to produce that shit? And yes, they really are cutting down trees, and yes, a significant percentage of that is not farmed timber, which does not make the best paper. And a truly puzzling percentage of this spam is printed on heavy, glossy paper. I could do without that nonsense. I really have no need whatsoever to receive anything from the USPS.

    --
    "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
    1. Re:Just let the USPS die already by geoskd · · Score: 2

      Yeah, the billion dollar profits over each of the last 5 years shows they've clearly overpriced themselves in the market, and won't survive long.

      Personally, I think the fact you can get letters delivered up to 5,000 miles away for less than $.50 is pretty amazing, but if you want to think that's overpriced and they're screwing you, go right ahead.

      For all of those out there who don't understand the post offices financial situation, They are regularly and routinely funded by congress to make up significant shortfalls in their operations. You can look at the USPS annual report for more information. Specifically, Page 86 where you can see that the USPS has had four solid years of 9 digit losses, and that the USPS currently owes the US treasury over 13 Billion in interest free loans. That is *after* the US congress voted in 2009 to forgive $4B in USPS debt to help fund their pension costs.

      If that doesn't amount to the US tax payers subsidizing a failed business model, I don't know what does.

      -=Geoskd

      --
      I wish I had a good sig, but all the good ones are copyrighted
  10. Re:Just in time to close up shop. by Kelbear · · Score: 2

    (Not really directed at the parent, but all the analogy-fans)

    Analogies aren't useful within a forum of people who understand the matter at hand.

    Attempts to re-frame the matter into a different context will run into the obstacles of the new context's characteristics. At best, they can only achieve an equivalent understanding of the issue within an alternate context that runs so deeply parallel that there was no point in changing context at all.

    The analogy is only useful when explaining a topic for which the audience has absolutely no knowledge /and/ no frame of reference through which to grow an understanding of any new information presented directly. Let's give people enough credit, and admit that they, at least on some level, know what "software" is.

    Any attempt to discuss subtleties of an issue will need to discard the analogy, and address the issue directly, in order to have a productive discussion about the issue, and not the shortcomings of an analogy.

  11. Re:Just in time to close up shop. by Kelbear · · Score: 2

    In time, publishers/developers will charge an unlock fee for the entire game. They are currently priming the market with DLC and pay-to-play multiplayer modes.

    This will let them take a cut of the used game sales, and though it will reduce initial sale prices (since some gamers offset initial prices with the resale proceeds), the payoff will be worthwhile to them since they were previously receiving nothing from the subsequent sales. Note also that the sales lost from the increased effective price to new buyers won't be clear, but the income from used game unlocks will be in real dollars they can easily recognize. When other developer/publishers see the used game sale income stream being taken in, they will jump on the bandwagon until this becomes an industry standard

    Even farther in the future, there is potential for scaling unlock fees to adjust for the demand. Popular used AAA games continue to sell near full retail price for months. Other games fall pretty quickly. Scaling unlock fees will help them match the market more effectively than a fixed unlock fee. This will take time since MS/Sony/Nintendo will need to provide the implementation for it. Steam is already providing a great avenue for developers to scale prices to match demand for their game, so developers will eventually ask MS/Sony/Nintendo to give them similar flexibility. Heck, Sony is already implementing Steam into the Playstation Network in a limited fashion, so it may happen pretty quickly once used game unlocks come around.

  12. Re:Bad ruling by afidel · · Score: 3, Insightful

    Uh, yes I'm actually familiar with the facts in the case, the order says they were discriminated against by having their mailers machine processed instead of hand sorted. The *reason* they aren't hand sorted is that Gamefly *chose* to make their mailers not stick out to reduce theft. You can't complain that your mailers aren't being pulled before the sorts *and* try to make them not stick out. Gamefly *also* chose to use a tougher but heavier mailer to reduce their breakage costs but which result in higher fuel costs for the USPS, forcing the USPS to lose money on heavier envelopes or increase rates for the companies that were willing to reduce their fuel costs is stupid bureaucracy at its best.

    --
    There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
  13. Re:Bad ruling by smelch · · Score: 3, Insightful

    When you have to ship via USPS because nobody else is allowed to handle that particular class of mailing, and the people working at the USPS keep stealing the discs, and when you act to correct that they start charging you more, does it really still seem like Gamefly is being unreasonable?

    --
    If I can just reach out with my words and touch a butthole, just one, it will all be worth it.
  14. Re:Just in time to close up shop. by mldi · · Score: 2

    I think there's a big huff because how it's labeled affects how it's treated in the court of law.

    --
    If you aren't suspicious of your government's actions, you aren't doing your job as a responsible citizen.
  15. Re:Bad ruling by sjames · · Score: 2

    They're not being forced to subsidize anyone. They're being forced to either subsidize everyone in that class or none of them. They are perfectly free to choose none.

    The real question is why were they freely choosing to subsidize Netflix?