Why Sony Betamax Failed in the global market

Sony came up with the idea and technology of Betamax somewhere in1974. Home VCRs (Video Cassette Recorders) had started becoming available by then. So they approached Matsushita (JVC’s Mother Company) to discuss the forthcoming home video market. They had previously cooperated in the development and marketing of the "U - matic" format video cassette, which was mainly for the professional production market. However, Matsushita already had a technology created by JVC which they wanted to take forward in the market, the VHS (Video Home System). By this time, Sony was too close to production to compromise, and they hit the market in 1975. JVC entered the market with their VHS almost at the same time.

 Sony’s Beta format was a clearly superior product to VHS, but there were several factors which  Sony did not take into account which finally resulted in a product failure. They are listed below.

 Recording Time:

The original Sony Betamax video recorder could record for one hour, identical to the U-matic format, which had been sufficient for use in television studios. On the contrary, JVC's VHS could manage two hours, followed by RCA's entrance into the market with a four-hour recorder. This recording time was important as people believed that it was necessary to have at least a 4 hr recording time which was the telecast time of a U.S. football game.

RCA tried to enter into an agreement with Sony but Sony felt that the picture quality would be degraded severely, and at that time the Sony engineers felt the compromise was not worthwhile. Predictably, RCA took their technology to Matsushita and soon there were 4 hr capable VHS machines. Betamax eventually achieved 5 hours, but VHS topped that with a 10.6 hours with lower quality. Also, from the consumer perspective, buying a single 10-hour VHS tape was cheaper than buying two 5-hour Betamax tapes.

 Picture Quality:

Betamax had a slightly higher resolution, lower video noise and less crosstalk than VHS and was marketed as providing pictures superior to VHS’ playback. But for consumers the difference as seen on the average television was negligible.

 Availability and Cost:

VHS machines were available in rental, 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 (the third being Video 2000) competing formats meant that renting was an even more attractive choice as compared to buying. By the time Betamax machines became easier to rent, VHS had already claimed 70% of the market.

 Insufficient Market Research:

Sony was the first company to come up with the technology, so they assumed they would capture the market share without any problems. They expected no competition and expected to monopolize the market. They clearly did not do an in depth market research. They were experimenting with new technology and just wanted to enter the market irrespective of what the consumer wanted.

Beta sales dwindled away and VHS emerged as the winner of the format war. Sony seemed to have misjudged the home video market.

By 1988, Sony began to market their own VHS players and now all that remains of Beta is the term “Betamaxed” which is used to describe something that had a brief shelf life and was quickly replaced by the competition.

 

Resources:

http://en.wikipedia.org/wiki/Betamax

http://en.wikipedia.org/wiki/Videotape_format_war