Two years ago GameFly filed suit against the USPS due to discrimination in rates it was receiving as compared to businesses like Netflix and Blockbuster. As Gamasutra details, the price difference for round-trip mailing cost $1.05 for GameFly, as opposed to $0.44 for Netflix, leading to what GameFly reports as a monthly cost of $730,000, which is more than their monthly net income. The issue comes that disc-based mailings have to be hand-sorted, so as not to be broken in automated machines.
However, the Postal Regulatory Commission has ruled favorably toward GameFly in this case, which means USPS has sixty days to set up a new rate for Gamefly's shipping. Of course, the USPS may decide to appeal the decision, but as yet there has been no official word that they will do so.
Which begs the question what is in the future for GameFly if this price-cut for them follows? While one route could be to make their service cheaper, I am not entirely certain that will be the option taken. It is rare that I believe a company will cut prices permanently, and not just offer an introductory lower rate of some sort. However, among the deciding factors for my own cutting of its services from my budget was the price, and how I did not feel I was receiving my money's worth.
Instead, theoretically, they would be earning more of a profit, which would be used to better their services. When I lived in Chicago, I did use them, and found enough frustrations that I eventually cut ties with the service all together. Because there were no facilities near me, the shipping times often annoyed me. On top of that, I had to game their queue, as even if a game I had in the number one spot had high availability, I might receive the seventh game in my queue; instead, I made a separate text document of games I wanted to play and inserted them into GameFly's queue one by one.
In the short term, it seems their best options would be to put money toward opening up more facilities and buying more games to distribute, though the feasibility of such is not one on which I can speak closely. What I am interested in is how a service like OnLive will make a difference in how we obtain game rentals. GameFly often gets compared to Netflix, whether it's justified or not, and one realm where the latter clearly leads is online streaming. Of course, that would be a much longer-term project that would likely cost them quite a bit, and depends on how much they believe it would be worth. After all, the install-base for people who can use Netflix is quite a bit higher than people who might use GameFly's services.
However, as I am no longer in their reach of service, my own opinions are biased toward companies that offer the longer-term solutions of online content delivery. So, instead, I wonder what improvements in service others would like to see from GameFly?