The VCR Battle
Strategic Maneuvering and Mass-Market Dynamics: The Triumph
of VHS over Beta
Case by written by Michael A. Cusumano, Yiorgos Mylonadis and Richard S. Rosenbloom
Management of Innovation and Technology WS02/03
Dennis Damer, Svenja Lassen and Stefan Broda
Table of Contents
VCR History
Development of VCR market
”Sony is not an OEM manufacturer”
“The best standard we’re all working on”
VCR Technology Adoption Lifecycle
Why Sony lost
VCR history
1956:
invention of the Ampex VCR
1960‘s:
stagnation on the VCR market
1970:
cross-licensing agreement for video
recording patents (Sony, Matsushita, JVC)
1971:
Sony: Leadership of U-Matic invention
1975:
introduction of Sony`s Betamax format:
1976:
JVC introduced the Video Home System
(VHS) format
Development of VCR market
VHS and Betamax in comparison
Beta Format
VHS Format
20000
15000
10000
1977
1978
1979
30% Penetration in USA
25000
Pre-recorded tapes soar
30000
VHS adoption in Europe
35000
* VHS *
40000
Decisive period:
1975
– 78
1984:
1975: 1976 JVC
1977
1978:
1974 - 1977
• Zenith drops
Introduction
ofenters
VHS
• VHS
Group:
• Sony•introduced
• VHS
• Major
European Brands
Beta format
JVC,
Hitachi,
Betamax Matsushita,
European
Market
adopt VHS standard
• End of Beta
Sharp,
Mitsubishi,
Sanyo
• RCA adopts VHS
format
• Beta Group:
Sony, Sanyo, Toshiba
* Betamax *
45000
Formation of groups
VHS: Europe and US
50000
5000
0
1975
1976
Decisive Period
1980
1981
1982
1983
1984
1985
1986
1987
1988
BETAMAX
”Sony is not an OEM manufacturer”
Reluctant to share technology
 No OEM shipments
 Brand image consideration
Started production before
asking others
Differentiation strategy
Developed new features
Unable to satisfy market
Sony, Sanyo, Toshiba
JVC: “The best standard we’re all
working on”
VHS
Polite and humble
Integrated partners in
development
Alliance building
Mass production

Supplied OEMs
Imitating Sony‘s features
Initial advantage:

JVC, Matsushita, Hitachi, Sharp, RCA, Mitsubishi
Longer playing time
Some facts of the development
Special Effects Comparison
Wireless Remote
½ Speed
Slow/Still
Portable VCR
1/3 Speed
Scan/Slow/Still
Stereo recording
Hi-fi
One-unit camera-recorder
Beta
1977/3
1977/3
1979/3
1978/9
1979/3
1979/3
1980/7
1983/4
1983/7
Recording-Playing Time
VHS
1977/6
1977/6
1977/12
1978/2
1979/8
1979/8
1979/8
1983/5
1984/3
Year
Beta
1975/5 1 hr.
1976/10
1977/3
2 hr.
1977/10
1978/10 3 hr.
1979/3
4,5 hr.
1979/8
1982/3
8 hr.
VHS
2 hr.
4 hr.
6 hr.
VCR Market share by Country and Format (1983)
VHS
Beta
V-2000
USA
75
25
0
Japan
70
30
0
Britain
74
24
2
W. Ger.
60
20
20
France
70
20
10
Italy
60
20
20
Above Totals
72
25
3
Why Sony lost
Neglected Early Majority (Mass Market)

Not able to satisfy demand:
Production capacity
Recording/Playing length of tapes
No compromises regarding technical standard
 Human factor of business (arrogance)
Refused to license Betamax to adult movie industry
 Network externalities
Thank you very much
for your attention!