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.