The first video cassette recorder (VCR) to become available was the U-matic system, released in September 1971. U-matic was designed for commercial or professional television production use, and was not affordable or user-friendly for home videos or home movies. The first consumer-grade VCR to be released was the Philips N1500 VCR format in 1972, followed in 1975 by Sony's Betamax. This was quickly followed by the competing VHS format from JVC, and later by Video 2000 from Philips. Subsequently, the Betamax–VHS format war began in earnest. Other competitors, such as the Avco Cartrivision, Sanyo's V-Cord and Matsushita's "Great Time Machine" quickly disappeared.
Sony had demonstrated a prototype videotape recording system it called "Beta" to the other electronics manufacturers in 1974, and expected that they would back a single format for the good of all. But JVC in particular decided to go with its own format, despite Sony's appeal to the Japanese Ministry of Trade and Industry, thus beginning the format war.
Manufacturers also introduced other systems such as needle-based, record-style discs (RCA's Capacitance Electronic Disc, JVC's Video High Density disc) and Philips' LaserDisc. None of these disc formats gained much ground as none was capable of home recording; however, they did hold small niche markets. CED's inexpensive record-like format (using a fine keel-shaped stylus to read an electronic signal rather than mechanical vibrations) made it attractive to low-income families during the 1980s, and LaserDisc's 5 megahertz/420 line resolution made it popular with discerning videophiles until circa 1997 (when DVD-Video became the new standard for high-quality).
Contrary to popular misconception, pornographic movies market wasn't a key factor in the videotape format war.
Sony had met with Matsushita executives in late 1974 or early 1975 to discuss the forthcoming home video market. Both had previously cooperated in the development and marketing of the U-Matic video cassette format. Sony brought along a Betamax prototype for Matsushita's engineers to evaluate. Sony at the time was unaware of JVC's work. At a later meeting, Matsushita, with JVC management in attendance, showed Sony a VHS prototype, and advised them it was not too late to embrace VHS "for the good of the industry" but Sony management felt it was too close to Betamax production to compromise.
While VHS machines' lower retail price was a major factor, the principal battleground proved to be recording time. The original Sony Betamax video recorder for the NTSC television system could only record for 60 minutes, identical to the previous U-matic format, which had been sufficient for use in television studios. JVC's VHS could manage 120 minutes, followed by RCA's entrance into the market with a 240-minute recorder. These challenges sparked a mini-war to see who could achieve the longest recording time.
RCA had initially planned a home video format around 1974, to be called "SelectaVision MagTape," but canceled it after hearing rumors about Sony's Betamax format, and was considering Sony as an OEM for an RCA-branded VCR. RCA had discussions with Sony, but RCA felt the recording time was too short, insisting that they needed at least a 4-hour recording time (reportedly because that was the length of an average televised American football game). Sony engineers knew that the technology available to manufacture video heads wasn't up to the task yet, but halving the tape speed and track width was a possibility. However, the picture quality would be degraded severely, and at that time Sony engineers felt the compromise was not worthwhile.
Soon after, RCA met with execs at the Victor Corporation of Japan (JVC), who had created their own video format christened "VHS" (which stood for "Video Home System"). But JVC also refused to compromise the picture quality of their format by allowing a four-hour mode. JVC's parent corporation, Matsushita, later met with RCA, and agreed to manufacture a four-hour-capable VHS machine for RCA.
RCA would go on to market "four hours, $999", forcing a price war and also a "tape length" war. Betamax eventually achieved 5 hours at Beta-III speed on an ultra-thin L-830 cassette, and VHS ultimately squeezed 10-and-a-half hours with SLP/EP speed on a T-210 cassette (or 12 hours on DVHS's T-240s). Slower tape speeds meant a degradation in picture quality, as adjacent video bands created "crosstalk" and noise in the decoded picture.
When Betamax was introduced in Japan and the United States in 1975, its Beta I speed of 1.57 inches per second (ips) offered a slightly higher horizontal resolution (250 lines vs 240 lines horizontal NTSC), lower video noise, and less luma/chroma crosstalk than VHS, and was later marketed as providing pictures superior to VHS's playback. However the introduction of Beta II speed, 0.79 ips (two-hour mode), to compete with VHS' two-hour Standard Play mode (1.31 ips) reduced Betamax's horizontal resolution to 240 lines. The extension of VHS to VHS HQ increased the apparent resolution to 250 lines so that overall a Betamax/VHS user could expect virtually identical luma resolution and chroma resolution (≈30 lines) wherein the actual picture performance depended on other factors including the condition and quality of the videotape and the specific video recorder machine model. For most consumers the difference as seen on the average television of the time was negligible.
Another improvement would be SuperBeta (sometimes called High Band Beta) in 1985. SuperBeta allowed for a gain of 20% to 290 lines in horizontal resolution and some mechanical changes to reduce video noise but Betamax's American and European share had already dropped to less than 10% of the market.
For PAL versions time was less of an issue. Betamax's longest tape (L-830) could record for 3 hours and 35 minutes, compared to VHS's 4 hours. For the European markets the issue was one of cost, since VHS had already gained dominance in the United States (70% of the market), and the large economy of scale allowed VHS units to be sold at a far lower cost than the rarer Betamax units. (See market share below.)
In the mid-to-late 80s, both formats were extended to Super Betamax and Super VHS. Super Betamax offered a slight improvement from 250 to 290 lines horizontally. Super VHS offered up to 420 lines horizontal (in modern digital terms, 560 pixels edge-to-edge) that surpassed broadcast-quality and matched the quality of laserdiscs in this one parameter. However, the "super" standards remained expensive niche products for a small minority of videophiles and camcorder hobbyists.
When home VCRs started to become popular in the UK, the main issue was one of availability and price. VHS machines were available through the high street rental chains such as Radio Rentals and DER (subsidiaries of Thorn-EMI, which also owned Ferguson Electronics which marketed JVC-sourced VHS recorders), while Beta was seen as the more upmarket choice for people who wanted quality and were prepared to pay for it. By 1980, out of an estimated 100,000 homes with VCRs, 70% were rented, and the presence of three competing formats (the third being Video 2000) meant that renting was an even more attractive choice, since a lot of money (about £2000) could be spent on a system which might become obsolete. By the time Betamax machines became easier to rent, VHS had already claimed 70% of the market.
Within continental Europe there were three choices by 1980, with the arrival of the Video 2000 format from Philips and Grundig, which replaced Philips' outdated "VCR" format. Although it featured many capabilities formerly only available on expensive broadcast video recorders, V2000 had too long a development cycle and arrived late to the market. Apart from this, to keep costs down many of its unique features, such as Dynamic Track Following, were only implemented on the most expensive models, meaning mainstream models suffered from indifferent video quality. Also, many features that came standard on VHS and Betamax machines (such as direct AV in and out connectors), were only available as expensive "optional extras" on V2000. The machines were also found to be less reliable than their VHS and Beta counterparts and for all these reasons the format never gained substantial market share. V2000 was cancelled in 1985, the first casualty of the format war.
The main determining factor between Betamax and VHS was the cost of the recorders and recording time. Betamax is, in theory, a superior recording format over VHS due to resolution (250 lines vs. 240 lines), slightly superior sound, and a more stable image; Betamax recorders were also of higher quality construction. But these differences were negligible to consumers, and thus did not justify either the extra cost of a Betamax VCR (which was often significantly more expensive than a VHS equivalent) or Betamax's shorter recording time.
JVC, which designed the VHS technology, licensed it to any manufacturer that was interested. The manufacturers then competed against each other for sales, resulting in lower prices to the consumer. Sony was the only manufacturer of Betamax initially and so was not pressured to reduce prices. Only in the early 1980s did Sony decide to license Betamax to other manufacturers, such as Toshiba and Sanyo.
Sony's decision in 1975 to limit Betamax's maximum recording time to one hour (for NTSC systems) handicapped its chances of winning this marketing war. VHS's recording time at first release (1976) was two hours—meaning that most feature films could be recorded without a tape change. It was not until the early 1980s that Betamax offered recording times comparable to VHS. In UK, the L-750 Betamax tape lasted 3 hours and 15 mins, while VHS was limited to a 3-hour maximum (The E-180), though later on an E-240 tape lasting four hours became available, though picture quality wasn't as good.
By the time Sony made these changes to their strategy, VHS dominated the market, with Betamax relegated to a niche position.
Although Betamax initially owned 100% of the market in 1975 (as VHS did not launch until the following year) the perceived value of longer recording times eventually tipped the balance in favor of VHS. By 1980, VHS had proven favorable among consumers and was successful in controlling 60 percent of the North American market. By 1981, sales of Beta machines in the United States had sunk to 25% of the VCR market. As movie studios, video studios, and video rental stores turned away from Betamax, the combination of lower market share and a lack of available titles further strengthened VHS's position. In the United Kingdom Beta held a 25% market share, but by 1986 it was down to 7.5%, and continued to decline further. In Japan, Betamax had more success, but VHS was still the market leader.
Both Betamax and VHS were supplanted by higher quality video available from laser-based technology. The last Sony Betamax unit was produced in 2002. Although VHS is still available in VHS/DVD combination units, the last dedicated JVC VHS unit was produced in 2008.
Beta sales dwindled away and VHS emerged as the winner of the format war. The video format war is now a highly scrutinized event in business and marketing history, leading to a plethora of market investigations into why Betamax failed. Sony seemed to have misjudged the home video market. Sony believed that the one-hour length of its current U-matic format would be sufficient for Betamax. However, U-matic was primarily a professional standard with constant surveillance by television technicians and which did not need more than one hour length per tape. For home usage, one hour would not be enough to record lengthy programming, such as a baseball game or a movie. Therefore, consumers naturally flocked to tape formats that could record two hours or more.
What Sony did not take into account was what consumers wanted. While Betamax was believed to be the superior format in the minds of the public and press (due to excellent marketing by Sony), consumers wanted an affordable VCR (a VHS often cost hundreds of dollars less than a Betamax); Sony believed that having better quality recordings was the key to success, and that consumers would be willing to pay a higher retail price for this, whereas it soon became clear that consumer desire was focused more intently on recording time, lower retail price, compatibility with other machines for sharing (as VHS was becoming the format in the majority of homes), brand loyalty to companies who licensed VHS (RCA, Magnavox, Zenith, Quasar, Mitsubishi, Panasonic, even JVC itself, etc.), and compatibility for easy transfer of information. In addition, Sony, being the first producer to offer its technology, also thought it would establish Betamax as the leading format. This kind of lock-in and path dependence failed for Sony, but succeeded for JVC. For forty years JVC dominated the home market with its VHS, Super VHS and VHS-Compact formats, and collected billions in royalty payments.
The video recording market was an unknown when VCRs first came on the market; as such, Sony and JVC were both developing technologies that were unproven. As a result of the desire to enter the marketplace faster, the firms both spent less time on research and development and tried to save money by picking a version of the technology they thought would do best without exploring the full gamut of options.
In 1988, Sony began to market its own VHS machines, and, despite claims that Sony was still backing Beta, it was clear that the format was dead - at least in Europe and North America. In parts of South America and in Japan Beta continued to be popular and machines were still in production up to the end of 2002. Despite the failure of Betamax, its technological successor the Betacam tape and its successor Digital Betacam (shortened to Digibeta) would become industry standard for video recording, production and presentation, and continue to be used to this day, though physical tape distribution is largely supplanted by digital delivery systems or high-definition tape media and recordings.
Following the videotape format war, VHS was dominant until the creation of digital video disc technology. The major electronics corporations agreed on a single standard for playback of pre-recorded material on DVDs. A minor skirmish arose over DIVX, but it died a quick death. A later format war resulted from a failure to agree on a single standard for DVD's high-definition successor (HD DVD) in May 2005. This format war ended in victory for Sony's Blu-ray Disc in February 2008.