While there has been a lot of back and forth on how to remedy the situation best, the Postal Regulatory Commission issued a directive today announcing that they will equalize the rates for "letter- and flat-shaped DVD mail" by reducing the price for a two-ounce First-Class flat-shaped round-trip DVD mailer to the price of a one-ounce mailer First-Class letter-shaped round-trip DVD mailer beginning on Sept. 30.
The decision was the result of another directive issued on June 26 of this year, following the decision by the United States Court of Appeals in the District of Columbia in the case GameFly v. Postal Regulatory Commission in January. In its case the video game rental company claimed that the USPS was giving preferential treatment to Netflix, while mishandling its mailers. Specifically the company said that the USPS hand-sorted Netflix DVDs while letting GameFly's disc mailers be sorted by machine. This, they alleged, often resulted in customers receiving damaged discs.
Full details on the Postal Regulatory Commission's decision – including a detailed accounting of the back-and-forth between GameFly, the USPS, and other interested parties including Netflix, can be found in this PDF. By all accounts getting to this point has been a real challenge for all involved…
Update: we corrected the name of the agency in the article to its proper name, the "Postal Regulatory Commission."