1. 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/ Dennis Damer, Svenja Lassen and Stefan Broda

2. 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

3. 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

4. Development of VCR market
* Betamax *
* VHS *
Formation of groups
VHS: Europe and US
VHS adoption in Europe
Pre-recorded tapes soar
30% Penetration in USA
Decisive period:
1976 JVC
Introduction of VHS
1975 – 78
VHS Group:
Matsushita, JVC, Hitachi, Sharp, Mitsubishi, Sanyo
Beta Group:
Sony, Sanyo, Toshiba
1975:
Sony introduced Betamax
1977
VHS enters European Market
RCA adopts VHS format
1984:
Zenith drops Beta format
End of Beta
1978:
Major European Brands adopt VHS standard
Decisive Period

5. ”Sony is not an OEM manufacturer”
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

6. JVC: “The best standard we’re all working on”
VHS
JVC: “The best standard we’re all working on”
Polite and humble
Integrated partners in development
Alliance building
Mass production
Supplied OEMs
Imitating Sony‘s features
Initial advantage:
Longer playing time
JVC, Matsushita, Hitachi, Sharp, RCA, Mitsubishi

7. Some facts of the development
Special Effects Comparison
Beta VHS
Wireless Remote 1977/3 1977/6
½ Speed /3 1977/6
Slow/Still /3 1977/12
Portable VCR 1978/9 1978/2
1/3 Speed 1979/3 1979/8
Scan/Slow/Still 1979/3 1979/8
Stereo recording 1980/7 1979/8
Hi-fi /4 1983/5
One-unit camera-recorder 1983/7 1984/3
Recording-Playing Time
Year Beta VHS
1975/5 1 hr.
1976/ hr.
1977/3 2 hr.
1977/ hr.
1978/ hr.
1979/3 4,5 hr.
1979/ hr.
1982/3 8 hr.
VCR Market share by Country and Format (1983)
USA Japan Britain W. Ger. France Italy Above Totals
VHS
Beta V

8. 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

9. Thank you very much for your attention!