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!
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