US court orders Postal Regulatory Commission to stop favoring Netflix over services like Gamefly

US court orders Postal Regulatory Commission to stop favoring Netflix over services like Gamefly

After suing the US Postal Commission back May 2011 for giving Netflix special treatment, video game rental service GameFly has lucked out in the courts today: a “three-judge panel in Washington” (DC) has reportedly ordered the Postal Regulatory Commission to end “all discrimination” against Gamefly, or to “explain why treating GameFly differently than Netflix is reasonable.”

As Bloomberg details, this ruling could alter the way Netflix shipments are treated by the US Postal Service. The U.S. Court of Appeals found that the post office had given Netflix special treatment, manually sorting its DVDs at no extra charge. The court decided that without similar favoritism, “GameFly could be subject to an ‘epidemic’ of broken discs.”

That Netflix once tried to sever itself from its DVD delivery service completely back in 2011 makes this development all the more interesting. This is an area which Netflix CEO Reed Hastings sought to abandon, and now the company could encounter new obstacles in this space — all while Netflix faces growing competition from the likes of Amazon, Hulu and even Verizon’s Redbox Instant.

U.S. Circuit Judge David Sentelle explained that the “Postal Service has saved Netflix — apparently its biggest DVD mailer customer — from this crippling otherwise industrywide problem by diverting Netflix mail from the automated letter stream, shifting it to specially designated trays and containers, hand culling it, and hand processing it. Rather obviously, this is not without cost to the Postal Service.”

We have reached out to Netflix on this matter and will update this story once we receive a response. At the time of writing, Netflix’s stock is up 3.51 points in trading.

In other news, Netflix recently announced that Arrested Development will debut exclusively on its service this May with 14 episodes.

Image credit: Getty Images

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