GAMEFLY SPENDS MORE ON SHIPPING PER MONTH THAN INCOME

If you’re a gamer, you’ve probably heard of Gamefly. If you haven’t, here it is in a nutshell: it’s Netflix for video games. For a monthly fee, gamers can rent games which are delivered by the US Postal Service; when they’re done with them, they just mail them back.

Gamefly mails out about over a million games a month. With that amount of shipping, you’d think that Gamefly must have a special deal inked with the USPS to deliver their games cheaply and efficiently… but they don’t, and Gamefly’s failure to get such a deal inked has them writing to the Postal Regulatory Commission for resolution.

Gamefly wants the US Postal Service to allow them to pay the same amount of shipping that Netflix pays. Why is this such a pressing issue for them? It’s more than just about maximizing profits: according to a letter sent anonymously to Ars Technica, Gamefly is currently spending more shipping discs every month than they are making in subscriber fees.

“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,” wrote Gamefly in a complaint. “This amount represents more than 100 percent of GameFly’s monthly net income in 2011.”

While Gamefly characterizes the issue as one in which Netflix gets preferential treatment over their own service, the fact of the matter is that Netflix discs are mailed in packages that are brightly colored to assist in manual sorting, they’re lighter than GameFly mailers, and Netflix operates at a much higher volume than the game rental service.

While the issue is more complicated than GameFly wants to admit, one thing’s for sure: either GameFly figures a way to minimize shipping costs, or the company is going to fold. You might want to capitalize on your subscription while you can.