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What Were They Thinking #23 Sony loses on Betamax in the videotape format war

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The funny thing about technology is that even if you have the best technology out there, it doesn’t mean anything if the format you have developed hasn’t caught on with the public. It’s why we live in a PC world when Macs are simply superior machines.

A format war is a competition between mutually incompatible proprietary formats that compete for the same market. In the 1970s, a costly and bitter format war erupted over the videocassette recorder.

Up until the 1990’s, Sony was considered the premier manufacturer of electronic equipment especially television sets and they were developing a format for video cassette recorders. Sony had demonstrated a prototype videotape recording system it called “Beta” to the other electronics manufacturers in 1974, and expected that they would back a single format for the good of all. But JVC in particular decided to go with its own format.

While many people joke about Betamax, the fact is that it was a far superior videotape format than VHS. Sony’s Beta had better video resolution and lower video noise. But a better resolution can’t compete with lower prices.

While Sony pushed for their Betamax format, JVC was far more open in pushing their VHS format. JVC, licensed the VHS format to any manufacturer that was interested in it. The manufacturers then competed against each other for sales, resulting in lower prices to the consumer. Sony was the only manufacturer of Betamax initially and so was in no pressure to reduce prices. Only in the early 1980s did Sony decide to license Betamax to other manufacturers, such as Toshiba and Sanyo, but it was already too late.

Another reason why Sony failed with Betamax was tape recording time. Sony’s original decision to limit Betamax’s maximum recording time to one hour crippled its chances of winning the video format war. VHS’s recording time at first release was two hours—so that meant hat most feature films could be recorded without a tape change. It wasn’t until the early 1980s that Betamax offered recording times comparable to VHS. By then, it was already too late. By 1981, sales of Beta machines in the United States had sunk to 25% of the VCR market. It was relegated to a niche part of the business for videophiles before Sony pulled the plug.

Format wars are expensive and there will be a winner and a loser. Sony learned from its Betamax mistakes in the next format war, but that’s the next article in the series.

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