GameFly to be Cross-Examined by Postal Commission26 Jul, 2010 By: Erik Gruenwedel
GameFly July 28 will be cross-examined by lawyers from the U.S. Postal Service regarding the by-mail video game rental service’s allegations that mailers from Netflix and Blockbuster By-Mail receive preferential treatment resulting in fewer broken discs.
GameFly April 23, 2009 filed a complaint with the USPS alleging discrimination and that it provided “unreasonable preferences” in rates and handling practices to Netflix and Blockbuster Inc. when dealing with DVD mailers.
The Los Angeles-based service, which at the time of the filing said it shipped about 590,000 discs per month, contended that to meet the 1-ounce first-class mail weight limit, it experienced a surge in broken discs due to absence of protective inserts in mailers. Adding the inserts bumps the mailer to 2 ounces, increasing postage from 42 cents to $1.
Upon visual inspection of several postal processing facilities, GameFly alleges it saw workers processing both Netflix and Blockbuster first-class mailers by hand, unlike most first-class mail that is processed via automation.
GameFly asserts the issue became acute after Blockbuster announced plans to test by-mail distribution of video games. Netflix does not rent games.
Netflix said it will spend more than $600 million in postage fees this year, making the online DVD rental pioneer the postal service’s largest single customer.
GameFly said it will send CEO David Hodess and consultant Sander Glick to the cross-examination in Washington, D.C. The service is seeking identical mailing pricing and handling afforded Netflix, Blockbuster and other DVD rental services, among other relief.