Court Ruling Opens Window for Netflix Rivals

GameFly, a company that rents computer games on DVD, dealt a blow to video rentals giant Netflix’s business model today, when a district court of appeals found that the United States Postal Service gave Netflix an unfair advantage by hand-sorting its DVDs for free and must develop a plan to handle all DVDs the same way at the same price.

The post office’s automatic sorting system often damages disks, particularly those being returned to the company.