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Strategic Maneuvering and Mass-Market Dynamics: The Triumph of VHS over Beta

Published online by Cambridge University Press:  13 December 2011

Michael A. Cusumano ,
Yiorgos Mylonadis  and
Richard S. Rosenbloom
Michael A. Cusumano
Affiliation:
Michael A. Cusumano is associate professor of management at the Sloan School of Management of the Massachusetts Institute of Technology.
Yiorgos Mylonadis
Affiliation:
Yiorgos Mylonadis is assistant professor in the Department of Management at the Wharton School of the University of Pennsylvania.
Richard S. Rosenbloom
Affiliation:
Richard S. Rosenbloom is David Sarnoff Professor of Business Administration at the Harvard Graduate School of Business Administration.
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Abstract

This article deals with the diffusion and standardization rivalry between two similar but incompatible formats for home videocassette recorders (VCRs): the Betamax, introduced in 1975 by the Sony Corporation, and the VHS (Video Home System), introduced in 1976 by the Victor Company of Japan (Japan Victor or JVC). Despite being first to the home market, the Beta format fell behind the VHS in market share during 1978 and declined thereafter. By the end of the 1980s, Sony and its partners had ceased producing Beta models. This study analyzes the history of this rivalry and examines its context—a mass consumer market with a dynamic standardization process subject to “bandwagon” effects that took years to unfold and that were largely shaped by the strategic maneuvering of the VHS producers.

Type
Articles
Information
Business History Review , Volume 66 , Issue 1: High-Technology Industries , Spring 1992 , pp. 51 - 94
Copyright
Copyright © The President and Fellows of Harvard College 1992

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References

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2 Betamax is a trademark of the Sony Corporation. VHS is a trademark of the Victor Company of Japan (JVC).

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11 See Rosenbloom and Cusumano, “Technological Pioneering and Competitive Advantage,” and Rosenbloom and Freeze, “Ampex Corporation and Video Innovation.”

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15 Rosenbloom and Freeze, “Ampex Corporation and Video Innovation.”

16 Katz and Shapiro, “Technology Adoption in the Presence of Network Externalities.”

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24 Nihon Keizai Shimbunsha, ed., Gekitotsu, 33–34; Lardner, Fast Forward, 156.

25 Quoted in TV Digest, 16 Feb. 1976.

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28 See Appendix A and Tables 5, 6, and 3; Nayak and Ketteringham, Breakthroughs! 42; Nomura Management School, “VTR Sangyo noto”; and “Innovations Spur Boom in VCR Sales,” The New York Times, 11 Dec. 1984, D1.

29 Nihon Keizai Shimbunsha, ed., Gekitotsu, 54.

30 JVC committed to supplying Hitachi on an OEM basis although this entailed that a large portion of its production capacity of about 2,000–3,000 units per month would be diverted to that end. This portion would have been significantly smaller for Sony, which, at the time, had a production capacity of more than 7,000 units per month. See Nomura Management School, “VTR Sangyo noto”; and TV Digest, 21 April 1975 and 13 Dec. 1976.

31 Nayak and Ketteringham, Breakthroughs! 46.

32 Michael A. Cusumano interview with Susumu Gozu, Manager, Domestic Sales Dept., Video Products Division, Victor Company of Japan, July 1989.

33 Kokichi Matsuno, message to employees in taking over as JVC President in 1975, and Shizuo Takano, JVC's Video Department manager, both quoted in Nayak and Ketteringham, Breakthroughs! 41. Susumu Gozu, in his interview with Cusumano, gave a similar account of JVC's approach.

34 Nayak and Ketteringham, Breakthroughs! 32–33; also, Gozu interview.

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38 Nihon Keizai Shimbunsha, ed., Gekitotsu; Yanagida Kunio, “VHS kaihatsu dokyumento” [Documentation of VHS development], Shukan gendo, May 1980; Richard S. Rosenbloom interviews with Nobutoshi Kihara and Masaaki Morita, Senior Managing Directors, Masaru Ibuka, Honorary Chairman, and Akio Morita, Chairman, Sony Corporation, July 1980.

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40 Nomura Management School, “VTR Sangyo noto,” 4.

41 Rosenbloom and Cusumano, “Technological Pioneering and Competitive Advantage”; Yanagida Kunio, “VHS kaihatsu dokyumento”; Michael A. Cusumano interview with Gozu of JVC as well as with Tak Matsumura, Assistant Director, Video Recorder Division, Matsushita Electric, July 1989.

42 Nihon Keizai Shimbunsha, ed., Gekitotsu, 21–24, 54; Lardner, Fast Forward, 159.

43 Yokomizo, “VCR Industry and Sony,” 39–40.

44 TV Digest, 4 April 1977.

45 Itami, Nihon no VTR sangyo.

46 Lardner, Fast Forward, 161–63; Nayak and Ketteringham, Breakthroughs! 47.

47 TV Digest, 11 July 1979.

48 Ibid., 29 Aug. 1977.

49 Ibid., 30 May, 27 June, 7 Nov. 1977.

50 Ibid., 4 April 1977.

51 Ibid., 29 Aug., 3, 31 Oct., 7 Nov. 1977.

52 Klopfenstein, Bruce C., “Forecasting the Market for Home Video Players: A Retrospective Analysis” (Ph.D. diss., Ohio State University, 1985)Google Scholar.

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54 Klopfenstein, “Forecasting the Market for Home Video Players,” 141.

55 Richard S. Rosenbloom, personal interviews at RCA, 1982.

56 TV Digest, 6 Oct. 1980.

57 Ibid., 8 Dec. 1980.

58 The Wall Street Journal, 21 April 1986, 20D.