By-mail and PC on-demand video game rental service GameFly went through a round of layoffs today as part of a restructuring plan. GameFly CEO Dave Hodess expressed the business is aligning itself better to existing console and digital games markets.

"We studied our business and determined that we could operate with a smaller team while continuing to provide the same high level of service to our customers," said Hodess in a prepared statement provided to Joystiq. "Aside from a greater focus in our software development efforts, we're not making any significant changes in our console subscription or digital download businesses. GameFly remains profitable with a strong balance sheet."

The company did not mention the extent of the layoffs, but sources tell us it was 35 employees in total, with another mentioning it was a third of the Los Angeles-based company's staff. Much like GameStop's used games business, a digitally distributed future of one-time-use watermarked games isn't likely to be kind to the by-mail rental service. The fact that GameFly also owns Direct2Drive (now GF Digital) may soften the blow.

Update: "The layoffs represented approximately 15 percent of [GameFly] staff," a spokesperson for the company informs Joystiq.

This article was originally published on Joystiq.