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GameFly Scores In Longstanding DVD Mailing Complaint

Posted by timothy on from the everything-competes-with-everything-else dept.

An anonymous reader writes "GamePolitics reports that the Postal Regulatory Commission has ordered [PDF] the U.S. Postal Service to equalize the rates paid by mailers who send round trip DVDs, and concluding (sort of) a dispute that has been underway for more than four years. The new postage rates take effect on September 30th. Some mailers, prominantly Netflix, send their round-trip movie DVDs as 'letters,' but GameFly's gaming disks are sent in slightly bigger envelopes as 'flats' to avoid breakage, and so GameFly has paid a much higher postage rate. GameFly argued that this was unfair discriminatory treatment because USPS was providing special hand-sorting treatment for Netflix disks without charging Netflix for the extra handling. But now there's a new twist: the Postal Service wants to reclassify DVD mailing [PDF] as a competitive product, where the prices would not be limited by the rate of inflation, because it says that mailed DVDs compete with the internet, streaming services, and kiosks such as Redbox. The regulatory agency is accepting responses [PDF] from interested persons until September 11th to the Postal Service's latest comments on its request [PDF]."

22 of 147 comments (clear)

  1. Aaaaand... by Anonymous Coward · · Score: 3, Interesting

    And regular mail doesn't compete with Email at all right?

    1. Re:Aaaaand... by hedwards · · Score: 4, Interesting

      Not really, sure people are sending less mail, but mail isn't the only thing that the USPS delivers. I keep hearing people declare the USPS dead because of the internet, and the only reason they're having financial problems at all is because they were given a decade to fund their pensions 100%, which is more than what even responsible companies do.

      What's more, the internet can't do things like have proper signature requirements, there's no guarantee of privacy like there is with things mailed within the US.

      I know it's popular to badmouth the postal service, but seriously, how are physical things going to be transported without something filling that niche? And the USPS is pretty much the most cost effective way of doing that in the US.

    2. Re:Aaaaand... by aardvarkjoe · · Score: 2

      There are plenty of private carriers that deliver physical things. UPS, FedEX, DHL, others. Typically the private carriers do a better job. In my opinion that makes private service worth paying more for. I haven't used USPS to send things for years.

      This seems to depend an awful lot on the local post office. In my area, sending packages via USPS is very good -- much more reliable and timely than UPS, and on par with FedEx, though much cheaper. On the other hand, I know people in other places where USPS is so bad that it's completely pointless to use it -- packages and letters are "lost" or destroyed more often than not.

      The result is that if I have something being shipped to me, then I have the sender use USPS. If I'm shipping something myself, though, then unless I know that USPS is reliable for the receiver, I'll use another service.

      --

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  2. gamefly wins to lose by Dan667 · · Score: 4, Insightful

    sounds like in winning gamefly may have put the nail in their profit margin. Instead of adopting the Netflix mailer and accepting breakage as part of doing business everyone will now have to pay much much higher mailing. Ironically, this also will mean that dvd mailing services will probably start to die which hurts the USPS too.

    1. Re:gamefly wins to lose by mog007 · · Score: 3, Insightful

      Breakage is not a big deal for Netflix because brand new movies are not that expensive to replace. Even if they have to pay retail prices, you're looking at 15-20 bucks. Brand new video games are easily more than quadruple that at 50-60.

      Gamefly wouldn't be able to handle those losses.

      --
      Learn something new.
    2. Re:gamefly wins to lose by MozeeToby · · Score: 4, Insightful

      They almost certainly almost never have to replace broken movies. Look at the shelves at the local brick and mortar rental store next time a big release comes out, see the hundred or so copies? 2 weeks later it's 50, 2 weeks after that it's 10. In a year there's only a handful. So Netflix has their stock of the new release which, even taking into account how long it used to take to get some new releases, is much larger than the stock they will need just a few weeks down the road. Breakage gets written off, so long as it doesn't outpace the drop in demand (which I suppose it will one movies are old enough, but that isn't the majority of the business) you never need to worry about it.

    3. Re:gamefly wins to lose by OverlordQ · · Score: 4, Interesting

      > Look at the shelves at the local brick and mortar rental store next time a big release comes out, see the hundred or so copies? 2 weeks later it's 50, 2 weeks after that it's 10.

      Having worked in a video rental store, you'd be surprised how much those DVDs actually cost from the distributor. And yes, it's more than what you'd pay if you went out to buy it.

      --
      Your hair look like poop, Bob! - Wanker.
    4. Re:gamefly wins to lose by Dan667 · · Score: 2

      I just report a problem and send them back. I would only say 5% of disks have a problem and Netflix will immediately send a replacement so that has been good enough for me.

    5. Re:gamefly wins to lose by Anonymous Coward · · Score: 2, Insightful

      1. Movies which come out to rental stores prior to general Sale copies cost a holy shitload. I'm talking several hundred bucks a copy.
      2. This doesn't happen much any more, most companies are starting to release all at the same time.

      But more important than anything else:
      They are different products. Just because the physical disk shares the same physical dimensions does not mean the product has the same value. Gamefly is running a business where they can't accept as many busted disks as Netflix can, so they're trying to find a scapegoat to distract their investors from the fact their business model is starting to fail. They have the choice to either accept higher loss rates with more broken disks, or pay more for the shipping and send it in different packaging. I fail to see why the USPS should be involved at all in this.

    6. Re:gamefly wins to lose by Anonymous Coward · · Score: 5, Interesting

      As an ex video store owner I concure that yes when you're a little mom and pop shop you get reamed. But Netflix is like blockbuster. They buy in bulk and get much better rates than we do. In 1992 we were typically paying about $85 for a new release, and customers expected us to have multiple copies. Meanwhile, blockbuster was selling them to consumers at $45. Eventually we went to a model where we'd buy 1 from the distributer (so we'd have it on the release date), and then buy a couple more from blockbuster to backfill our inventory as soon as we could. Even still at $4.00 / day for a new release it takes a while to recover those costs. The averge interest didn't typically last more than a month, so even with all 3 coppies out at 4 / day (and that doesn't always happen) we'd make a max of $360, of which $175 is purchase costs. Now add into that equation the bad VCR that wrecks a tape, the overhead of running a brick and morter business, payroll, etc. We went out of business shortly after Blockbuster got big. We just couldn't compete.

    7. Re:gamefly wins to lose by lgw · · Score: 2

      There is no license needed to rent DVDs. It's a persistent urban legend. At least in the US, anything but "phonorecordings" can be rented out with no particular license.

      The old scam used to be that video tapes and early DVDs would sell for triple the "normal" price for the first 2-3 weeks. Since rental places would compete to offer popular titles as early as possible, they'd "volunteer" to get gouged.

      Some rental places do get special licensing, even though they don't have to. I believe Netflix does licensing that lets them print their own DVDs in whatever quantity they need, plus the licensing games for streaming rights sometimes include making Netflix pay more for rentals as well.

      --
      Socialism: a lie told by totalitarians and believed by fools.
  3. Ridiculous by Hatta · · Score: 2, Insightful

    The postage rates should be based on the size and weight of the package, the origin and destination, and nothing else.

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    1. Re:Ridiculous by jd.schmidt · · Score: 4, Insightful

      Basically that is the problem, the prices do not reflect true delivery costs by government mandate. The USPS is mandated to provide certain types of services at a certain cost no matter what.

      Effectively Netflix got low prices because they knew how to get their packages classified as protected mail. Also they really DID work very hard to make their packages as easy to sort and deliver as possible. They spent a lot of time working closely with the USPS to make a package that was easy for them to sort, they even went so far as to hire a bunch of USPS personnel to consult on how to do this.

      One more point, CDâ(TM)s are super cheap, the costs are controlled by the publishers, so they can make or break Gamefly and Netflix.

  4. Reclassify as a competitive product? by SirGarlon · · Score: 5, Funny

    So, the Postal Service says DVD mailing competes with Internet streaming and ... that means they want to charge *more*?

    "Competitive." You keep using that word. I do not think it means what you think it means.

    --
    [Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
    1. Re:Reclassify as a competitive product? by alexander_686 · · Score: 2

      Are you trying to say “Monopolies” are a synonym for “Bloodthirsty pirates who are only interested in booty?” because that is not what monopoly means. There are a lot of monopolies out there that lose money.

      Case in point, USPS. In exchange for a monopoly they are heavily regulated. I am a free marketer and I think the USPS service does a decent job for the money. There are a lot of other cases out there like that.

  5. How Long Before Postal Services Die Out? by wrackspurt · · Score: 2

    Canada Post has seen drastic drops in volume. How much longer before federal governments just pull the plug and let postal services die and be replaced by private business. What reasons are there for federally funded postal services to be continued?

  6. Re:o man by SirGarlon · · Score: 4, Insightful

    Tell that to Congress. They're the ones micro-managing the Postal Service and setting arbitrary rates. Those rates, BTW, are not sufficient to fund the Postal Service pension system at the level Congress demands, which is why the Postal Service is in crisis.

    --
    [Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
  7. Re:o man by serviscope_minor · · Score: 3, Informative

    Those rates, BTW, are not sufficient to fund the Postal Service pension system at the level Congress demands

    Quite. For those who missed it, the rates are entirely fine to find the pension scheme. Naturally government run stuff has to be bad (for some reason) so they mandated the most insane pension scheme ever (funding pensions for people quite a few years away from being born) just so the USPS would "fail". Even so, due to the strength of it the crisis is not terminal, which does go to show how good it was.

    I'm assuming that congress is wrecking the USPS for the same reason Parliament is wrecking the Royal Mail, namely so they can prove their flawed ideology that all government run stuff must be bad and use that as an excuse to sell it off to some of their cronies.

    --
    SJW n. One who posts facts.
  8. Re:No paper requirement, no bending requirement by Guppy06 · · Score: 2

    Sorry, but no. There is no requirement for letter-class mail to be paper nor be bendable.

    http://pe.usps.gov/text/dmm300/101.htm#1039555

  9. Re:o man by lgw · · Score: 3, Interesting

    No, the USPS has a government-enforced monopoly on non-urgent letter delivery, and they've gone to court to enforce it before. IIRC they've even sued random businesses for sending non-urgent mail by FedEx, because that violates their monopoly (this was a story from the early days of /.).

    The law stops UPS from delivering letters to your door.

    --
    Socialism: a lie told by totalitarians and believed by fools.
  10. Re:o man by SirGarlon · · Score: 2

    The Cato Institute (a conservative think tank, for those who don't recognize the name) disagrees with your assessment that the Constitution gives the Federal government a monopoly on postal service. If what you say were as simple as that, wouldn't FedEx have been shut down by the real Feds?

    --
    [Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
  11. Re:o man by nedlohs · · Score: 2

    Not at all.

    The constitution empowers Congress "to establish Post Offices and post Roads" but it does not require them to do so.

    If you think it does then you must also think these debates about Syria are silly, since the same section empowers Congress "to declare War" so they have to do so, right?