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Rent-by-mail video game company Gamefly has filed a complaint against the United States Postal Service alleging improper handling of mail and preferential treatment of larger competitors Netflix and Blockbuster.

According to the complaint, filed with the Postal Regulatory Commission, Gamefly mails 590,000 video games monthly, and between one and two percent of those games is broken in transit or stolen along the way. If you’re keeping score, at $50 per game that could be upwards of $600,000 lost in a month. (That’s assuming it’s two percent and game prices are $50 wholesale, which is doubtful.)

Upon realizing so many of its games weren’t making it through the delivery process, Gamefly and the Postal Service tested to see what was happening. Even after changing to sturdier mailers with special handling instructions with specific mail machines listed, Gamefly games were still broken in the process. Nineteen USPS employees were also arrested for theft.

According to the complaint, the investigation also found that competitors Blockbuster and Netflix DVDs were manually removed from bulk mail and not processed through machines. This led to the company’s allegations of discriminatory treatment. Gamefly says working to resolve the problem with the USPS has not been successful.

The rental by mail industry has boosted revenue for the USPS significantly in the age of email. One wonders for how long, though, considering the near future includes a shift to digital delivery and storage. In that respect, Gamefly’s, Netflix’, and Blockbuster’s business models are all in jeopardy unless they enter into the download market, which may well be dominated before their arrivals.

Regardless, the shift to digital delivery and service will eventually take care of the problem of discs broken in transit.