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Often called the 'netflix of gaming' GameFly must pay more to ship their games than Netflix. In fact, according to David Hodess, president and CEO of GameFly, in a letter written on March 23rd to the Postal Regulatory Commission:
"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, and 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."
The letter, in its entirety, can be read here.
Anticipating such costs, Gamefly spent 18 months in informal talks with the Regulatory Comission in order to resolve the matter, but more than two years have gone by since GameFly submitted a formal complaint to the Regulatory Commission without seeing a result.
There are, of course, other differences between Netflix and Gamefly. Netflix has 58 centers of distribution, Gamefly has 4. Netflix discs are shipped in a vivid red sleeve, making it easier for postal employees to sort. Gamefly has opted for classic white, in an attempt to deter theft. Still one postal worker managed to steal more than 2,200 gamefly games. Gamefly pays about $50 per game and thus ships a hefty cardboard insert to protect the game from damage, which adds to the cost of shipping.
There are even differences in the methods by which each game is shipped.
"Both Blockbuster and GameFly utilize Business Reply Mail for their return mail pieces, which requires an accounting step to assess postage due fees; while Netflix utilizes Permit Reply mail where return postage is prepaid and the postage due assessment step is not required," Larry J. Belair, the senior plant manager for the US Postal Service in San Diego said in a filing to the Postal Regulatory Commission.
He went on to say that when large volumes of mail from one entity, such as Netflix, arrive at once, they can be sorted by themselves, in bulk.
"When volume densities of a single DVD rental company's pieces warrant, postal employees may segregate all of that company's pieces (that are located—some are not found) in separate trays so they can avoid downstream handling," he explained. "Segregation can begin as far upstream as the rental customer's delivery unit."
He's estimated that 97% of dvd mailers belong to Netflix, while 1% belongs to Gamefly.
So it seems there are many factors (as is always the case) contributing to Netflix's 'preferential treatment' but it would effect many gamers if this company would be hurt by postage fees.
source
"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, and 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."
The letter, in its entirety, can be read here.
Anticipating such costs, Gamefly spent 18 months in informal talks with the Regulatory Comission in order to resolve the matter, but more than two years have gone by since GameFly submitted a formal complaint to the Regulatory Commission without seeing a result.
There are, of course, other differences between Netflix and Gamefly. Netflix has 58 centers of distribution, Gamefly has 4. Netflix discs are shipped in a vivid red sleeve, making it easier for postal employees to sort. Gamefly has opted for classic white, in an attempt to deter theft. Still one postal worker managed to steal more than 2,200 gamefly games. Gamefly pays about $50 per game and thus ships a hefty cardboard insert to protect the game from damage, which adds to the cost of shipping.
There are even differences in the methods by which each game is shipped.
"Both Blockbuster and GameFly utilize Business Reply Mail for their return mail pieces, which requires an accounting step to assess postage due fees; while Netflix utilizes Permit Reply mail where return postage is prepaid and the postage due assessment step is not required," Larry J. Belair, the senior plant manager for the US Postal Service in San Diego said in a filing to the Postal Regulatory Commission.
He went on to say that when large volumes of mail from one entity, such as Netflix, arrive at once, they can be sorted by themselves, in bulk.
"When volume densities of a single DVD rental company's pieces warrant, postal employees may segregate all of that company's pieces (that are located—some are not found) in separate trays so they can avoid downstream handling," he explained. "Segregation can begin as far upstream as the rental customer's delivery unit."
He's estimated that 97% of dvd mailers belong to Netflix, while 1% belongs to Gamefly.
So it seems there are many factors (as is always the case) contributing to Netflix's 'preferential treatment' but it would effect many gamers if this company would be hurt by postage fees.
source
