VCR-Battle

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					                       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
50000




                                                                                                                                  30% Penetration in USA
                                                                                  Pre-recorded tapes soar
                                                         VHS adoption in Europe
45000
               Decisive period:
                                  VHS: Europe and US
                  1975: 1976 JVC – 78
                                  Formation of groups
40000                          1975
                                  1977                    1984:
                                       1978:
               1974 - 1977Introduction of VHS
35000                          • VHS • Major
                  • Sony•introduced Group: European Brands
                                  • VHS enters            • Zenith drops
          * Betamax *




                  Betamax Matsushita, JVC, Hitachi,       Beta format
                        * VHS *




30000
                                  European Market
                                       adopt VHS standard
25000                          Sharp, Mitsubishi, Sanyo
                                  • RCA adopts VHS        • End of Beta
20000
                                  format
15000                          • Beta Group:
10000                          Sony, Sanyo, Toshiba
 5000
    0
         1975           1976         1977               1978                      1979                      1980   1981   1982   1983                      1984   1985   1986      1987   1988



        Decisive Period
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:
                                                      Longer playing time
JVC, Matsushita, Hitachi, Sharp, RCA, Mitsubishi
Some facts of the development
Special Effects Comparison                       Recording-Playing Time
                           Beta      VHS         Year    Beta         VHS
Wireless Remote            1977/3    1977/6      1975/5 1 hr.
½ Speed                    1977/3    1977/6      1976/10              2 hr.
Slow/Still                 1979/3    1977/12     1977/3  2 hr.
Portable VCR               1978/9    1978/2      1977/10              4 hr.
1/3 Speed                  1979/3    1979/8      1978/10 3 hr.
Scan/Slow/Still            1979/3    1979/8      1979/3  4,5 hr.
Stereo recording           1980/7    1979/8      1979/8               6 hr.
Hi-fi                      1983/4    1983/5      1982/3  8 hr.
One-unit camera-recorder   1983/7    1984/3



VCR Market share by Country and Format (1983)
         USA      Japan    Britain   W. Ger.   France   Italy      Above Totals
VHS      75       70       74        60        70       60         72
Beta     25       30       24        20        20       20         25
V-2000   0        0        2         20        10       20         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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