Picture this: It’s 8 p.m. on a Sunday in 1985. Knight Rider is on NBC. But Murder, She Wrote is about to start on CBS. Two-thirds of American households will have to make an impossible choice: David Hasselhoff or Angela Lansbury? The remaining third, though, will be kicking back and watching both. How?
By programming their dual-tuner video cassette recorder, or VCR, a miracle of magnetic tape that transformed how we watch television and movies forever. But when they first came on the scene, not everyone was a fan. In fact, a major motion picture industry leader said that “The VCR is to the American film producer and the American public as the Boston Strangler is to the woman home alone.” Yeah, it gets a bit dramatic. It’s a story involving the Supreme Court, Mr. Rogers, Tom Cruise, and E.T., and we’re about to rewind it all.
The advent of television in the American home in the late 1940s and its dramatic adoption throughout the 1950s offered a whole new entertainment portal for Americans, who had grown accustomed to radio as the medium of choice in their homes. Now they could watch comedies like I Love Lucy, Westerns like Gunsmoke, and riveting dog-driven dramas like Lassie—presuming they were in front of their sets when the shows came on. If they weren’t, they’d have to hope the network aired a rerun at some point in the future ... or settle for a description from kids in school, co-workers, or their families.
Electronics manufacturers knew consumers wanted a way to free themselves from appointment television. In the 1950s, companies like RCA were trying to crack the code of practical video storage. The thinking was, if you could record audio on magnetic tape, why not video? But video footage requires much more data than audio, and therefore needs to move much more quickly around the tape heads in the machine. A company named Ampex figured out that instead of moving the tape around the heads at ridiculous speeds, the heads themselves should spin. With that breakthrough, Ampex introduced the Mark IV in 1956. But … there was a problem: The device was the size of a desk. It also cost $50,000, or about $500,000 in today’s dollars. Not exactly an affordable holiday gift. Ampex only sold a couple hundred of the machines to broadcasters who wanted to record their programs and had the budget to invest in the equipment.
One of the first practical television recording solutions for households was the Cartrivision, which debuted in 1972. The Cartrivision used 8-inch plastic cartridges that were inserted into a compartment on a television console to record shows. The blank tapes were $15 for about 15 minutes of recording time, so you’d need two to grab an entire episode of The Odd Couple, unless you wanted to shell out nearly $40 for a tape with 100 minutes of recording time. You could also rent feature films like Dr. Strangelove or High Noon for between $3 to $6 at participating retailers. You could only watch movies once, however, and that restriction wasn’t on the honor system. The tapes couldn’t be rewound on the machine at home, only on a special device in stores.
Cartrivision didn’t take off—not only was it a whopping $1500, or almost $9000 today, it was also hard to use. You needed two hands to program a recording, with one pressing a button while the other twirled a knob. When you did manage to perfect your ambidexterity and get it working, the picture quality was still poor due to a data-conserving recording process. Worst of all, you couldn’t just buy the Cartrivision by itself. That $1500 bought you an entire television console, including the tube. On a sales floor, it looked like any other television, except it cost three times as much. By 1973, Cartrivision was done.
That was probably for the best, because what was coming next was something the modest Cartrivision would never have been able to compete with: two massive Japanese companies spending millions of dollars to outdo each other in a bid to conquer the lucrative world of allowing people to watch movies in their underwear.
The Format Wars
It started peacefully. Both Sony and JVC recognized that television viewers wanted to engage in time-shifting, which allowed them to watch what they wanted when they wanted. In fact, the companies, with a little help from Ampex, collaborated to launch a machine called the U-matic in 1971. The U-matic was developed by Sony in concert with JVC and Matsushita (now known as Panasonic) in the hopes it could become a universal standard.
Since no one you know has ever owned a U-matic, you can probably guess there were problems. First, it weighed 59.5 pounds, which is about the same as an 8-year-old. Second, there was the cost. There’s a trend here of recorders selling for outrageous amounts of money. The U-matic went for up to $2000, or almost $13,000 today.
Because most people opted to buy, say, a lightly-used mid-size car instead, the U-matic went the way of the Ampex machine and was used mainly for commercial purposes. Sony and JVC knew they were on to something, but the machines needed to be much smaller, and so did the cassette tapes. And that’s where things started getting tense.
Both companies agreed a home video recorder should use magnetic tape about a half-inch in width. But Sony founder Masaru Ibuka was more concerned about the size of the cassette itself. He told his engineers that blank tapes should be about the size of a paperback book. And that’s how Sony designed what would come to be known as the Betamax machine.
JVC, on the other hand, wasn’t convinced they needed to limit the size of the tapes. Their designers, including Yuma Shirashi, who was general manager of the Research and Development Division, thought the most important feature was recording time—at least two hours. That would be enough for a couple of television dramas, a movie, or at least a significant chunk of a sporting event. If a cassette had to be a little bigger and the picture quality slightly inferior, well, that was a fair trade-off.
Shizuo Takano, who was general manager of the Video Products Division at JVC, didn’t want tapes of different sizes and lengths that would only confuse consumers. He wanted a worldwide standard. He knew it would take years for people to adopt the new technology, even comparing it to the steady growth of a bonsai tree. Both, he said, require years of unwavering commitment before bearing fruit. He also knew he’d need to cooperate with other electronics companies in order to get the machines in more hands. This business of different tape sizes wasn’t what he had in mind, and it complicated JVC and Sony’s relationship.
After a year of intense discussion over cassette size and picture quality, the companies decided they couldn’t come to terms. They went their separate ways, setting the stage for an epic showdown between Sony’s Betamax and JVC’s Video Home System—better known as VHS.
Let’s hit pause for a moment. Even though we all know who won the great format wars of the 1980s, we shouldn’t underestimate the fact that early on, Sony was very confident in their Betamax system. Granted, they initially made the same mistake Ampex did, insisting their recorder be sold as part of an entire television console, the LV-1901. Again, the price was steep—$2295, or about $11,000 today. But Sony also had a cool advertising campaign lined up for the machine’s U.S. debut in 1975.
Thanks to the built-in timer and dual tuner, you could record shows on channels you weren’t even watching or catch shows that aired when you weren’t home. Normal people called this recording. In ads, Sony declared that users would be “the controller and preserver of time,” that they would be “free from the restrictions of time,” and that they would be able to “break the time barrier.” In other words, Sony opted for subtlety.
Owing to sluggish sales of the combination television and recorder, Sony soon released a standalone Betamax unit, the SL-7200, which was a more reasonable $1300, or almost $6000 today. In just three months at the end of 1976, Sony sold a respectable 15,000 units.
But around the same time, JVC was announcing their VHS format in Japan. The tapes were about 30 percent larger, but they could record for two hours compared to Betamax’s one hour. They were also happy to license their technology to other companies, like RCA.
RCA recognized that sports fans would want to be able to record games running three hours or more. They told Sony that an option to slow down the recording speed to get more out of a videotape would be appealing to consumers. Sony ignored the suggestion, but JVC listened. Released in 1977, RCA’s first VHS model, the VBT200, allowed users to change the speed, getting up to four hours per $25 tape. There was a loss of picture quality, but sports fans didn’t really care. They just wanted to see the whole game.
Although both Betamax and VHS had roughly 240 lines of resolution each—that’s about a quarter the resolution of today’s high-definition signals—Sony was able to convince videophiles that Betamax had the superior picture. In truth, the difference in quality was minor, and on most televisions, it would be hard to tell a difference. Still, like audiophiles, videophiles wanted the best product possible, and in the late 1970s, a loyal following of Betamax users sprung up. They even had a name—Beta Heads—and a thriving community that corresponded by mail.
Let’s say you loved The Twilight Zone, but you missed a few episodes, like the one with the kid who wishes people away into a cornfield. Solution? Pick up The Videophile’s Newsletter, a fanzine that circulated in the late 1970s and 1980s that was focused on the burgeoning world of home video recording. In the classified ads, collectors could request certain episodes of television shows and list the duplicates they had to offer in trade. Two Mary Tyler Moore Show episodes for one Outer Limits? Done deal. Once you struck up a pen pal relationship with another Betamax collector, you could even keep trades going in the mail.
Beta Heads were serious aficionados. They subscribed to TV Guide from other regions so they could find out what shows were playing around the country. They organized conventions in Ohio where they would daisy-chain their VCRs together so they could get copies of desirable movies like Jaws or A Star Is Born. Because there were already concerns over piracy, they kept the location of such events a secret. Yes, there were clandestine meetings of Betamax collectors in Ohio.
And if that sounds paranoid, well, it wasn’t. Despite the billions of dollars they would eventually earn from the home video market, movie studios thought both Betamax and VHS were going to spell their doom. In fact, it was Motion Picture Association of America president Jack Valenti who compared the VCR to the Boston Strangler. (Valenti was really, really upset over videotapes.) Thankfully, Mr. Rogers was around to put things in perspective.
Mr. Rogers Goes to Washington
Both Betamax and VHS were designed with one purpose in mind—to allow consumers to create their own television schedules. But it became clear pretty quickly that consumers wanted something else, too. They wanted to be able to watch major motion pictures at home.
Remember—in the 1970s and early 1980s, movies on demand weren’t really a thing. Studios sometimes re-released big hits, and repertory theaters might screen older movies, but that still required heading out to the cinema. Unless a movie was licensed for broadcast television or a pay channel like HBO, you probably weren’t going to see it. One example? Star Wars. Released in 1977, it didn’t come out on Betamax and VHS until 1982. And it didn’t premiere on network television until 1984—after the two sequels.
That’s not to say there were no at-home options. LaserDiscs were being released around this time. In 1979, DiscoVision had around 200 titles in their catalog from companies like Universal, Warner Brothers, and Disney. The technology had one advantage over VCRs for the studios—you couldn’t record on it, which meant what the studio wanted you to watch was what you were watching. Those limitations might help explain why people largely ignored the format in favor of VCR.
Studios worried that Beta Heads would eat into ticket sales. Two of them, Universal and Disney, sued Sony in 1976. In addition to breaking the time barrier, Sony was accused of breaking copyright law by allowing the copying and distribution of content. Universal and Disney wanted sales of the machines halted.
The case went to trial in U.S. District Court in 1979, where the judge determined Sony was in the right and that VCRs were fair use of the studios’ content. Universal appealed, and two years later the decision was reversed. That set the stage for a showdown in front of the Supreme Court in 1983 and 1984, where the very idea of recording The A-Team was put on trial. And that’s where Fred Rogers comes in.
During the proceedings, Mr. Rogers testified in defense of the VCR. Home recording machines, he said, allowed families to control how and when they watched television. Mr. Rogers also argued that people should be allowed to make their own decisions, like when to sit down and enjoy a show. It sounds like a bit of a fairy tale ending, but in the end, the Supreme Court ruled in favor of Sony and cited Mr. Rogers’s comments in their decision. VCRs had non-infringing uses, they said, and programs could be taped for home use. The studios had wanted the VCR manufacturers to pay a royalty—as much as $50 per unit—plus a cut of tape sales to offset their projected loss of revenue. Instead, they had to face their new reality. VCRs were here to stay.
Well, VHS was. By the end of 1983, it was clear Betamax was on the ropes. Consumers had purchased millions of VCRs, but roughly 70 percent were VHS. It turns out JVC and RCA were right about longer-running tapes. Betamax eventually offered longer recording times, but by then, it was too late. People didn’t care if tapes were bulkier. They just wanted to watch a movie at home without having to change cassettes midway through. And now it was up to studios to figure out how to make money doing it.
Enter Tom Cruise.
Not all studios were scared of VCR in the late 1970s. A man named Andre Blay was convinced people would want to view movies at home. He tried convincing studios, but only Fox was interested. Through Blay’s company, Magnetic Video, they agreed to release 50 movies from their library like The French Connection and The Sound of Music. Blay paid them $300,000 up front and $500,000 annually, plus a royalty of $7.50 per tape. Then he sold the videos for around $50 to members of his Video Club of America, who paid $10 to join.
The business model worked. Fox actually bought Magnetic Video in 1979 and made Blay chief executive of 20th Century Fox Video for a time.
While the movies sold well, not everyone believed there was a market for high-priced films. People bought records because they liked hearing music over and over again. Would anyone watch Jaws 20 times?
The answer is obviously yes, but not everyone agreed at the time.
A man named George Atkinson believed it would be more appealing for consumers to rent movies instead of buying them. Those 50 Fox releases? He bought them and opened up what’s believed to be the first video rental store, Video Station, in Los Angeles in 1977. Customers paid a $10 rental fee per movie and Atkinson cleaned up. He hired an office manager, stuck him in the bathroom where there was a phone, and began selling his business model to other people.
The rental business would go on to become a fixture of home entertainment. By 1985, more than 15,000 rental stores were in operation. By 1987, 37 million VCRs were in homes that rented an average of eight movies a month. Instead of costing over $1000, the machines were now between $200 to $400, with some budget models as low as $169.
VCRs were so popular that they actually cut into the customer base for pay channels like HBO and Showtime, which relied mainly on broadcasting hit movies. In 1984, HBO had 1 million new subscribers. In 1985, they signed up just 100,000 new viewers. According to a 1986 account, The Movie Channel, aka Showtime, tried to offset the losses by encouraging VCR users to subscribe so they could tape movies—for home viewing only, of course. HBO, meanwhile, decided to put more focus into original programming.
The rental business was the main reason video cassettes were so expensive. Studios believed people wouldn’t buy an expensive videotape if they were only going to watch it once or twice. They also knew rental stores could rent the same tape dozens or hundreds of times over. So cassettes cost a bundle—up to $100 each. Studios wanted to make as much money as they could up front knowing they had no control over what happened to the cassette once it was sold.
But two studios thought there were actually two markets for VHS tapes. There was the rental market, which was booming, and what they called the sell-through market. If tapes were reasonably-priced, then plenty of people would opt to buy a movie outright rather than rent it, especially if it was something they’d watch over and over again. Like Disney movies.
Disney offered animated classics at sell-through prices in 1986 and sold a total of five million cassettes, including one million copies of Sleeping Beauty for the low, low price of $29.95. Paramount thought the strategy could work for adult movies, too.
(No, not those adult movies. And for the record, there’s no evidence VHS succeeded because Sony disallowed explicit movies on the Betamax format.)
Paramount offered Beverly Hills Cop and Indiana Jones and the Temple of Doom for $29.95. They sold about 1.4 million copies each. Market research, however, told studios that $19.95 was an ideal price point for consumers. That’s when they’d seriously consider buying rather than renting.
Paramount couldn’t quite get the price down that low. What they did instead was partner with Pepsi to launch a major marketing campaign for the 1987 home video release of Top Gun, the Naval fighter pilot training school drama starring Tom Cruise that was the biggest hit of 1986.
In exchange for running a 60-second Diet Pepsi commercial at the start of the tape, Pepsi would plug the movie in television ads. For $26.95, people could watch that beach volleyball scene as often as they liked. Top Gun went on to sell an impressive 2.9 million copies, and modestly-priced tapes of popular hits became common.
But believe it or not, consumers couldn’t always get instant gratification. E.T., which was released in 1982, wasn’t available on home video until 1988 because director Steven Spielberg was worried about piracy. Unless you caught one of the theatrical re-releases, E.T. fans actually weren’t able to watch the movie for most of the 1980s. When it was finally released, Universal made sure guards were posted at warehouses and followed along when the tapes were being transported. It even had a special hologram on the packaging to discourage pirates. And while it was $24.95, a $5 rebate brought it down to that magical $19.95 price point.
It sold 14 million copies.
Selling VHS tapes proved to be very lucrative, and not just for retailers like Walmart or independent video stores. McDonald’s got into the home video business in 1992, offering Dances With Wolves, Dirty Rotten Scoundrels, and Babes in Toyland for sale for $7.99 each at their 9000 restaurants. At the time, Dances With Wolves was a rental title, retailing for $99.98. Even though McDonald’s only offered the movies for two months during the holiday season, they sold 10 million tapes—enough to make them the third-largest seller of video cassettes that year, behind Walmart and K-Mart but ahead of Blockbuster Video.
Andre Blay had been right. People wanted to buy movies to watch over and over again. He probably didn’t see movies being sold at a drive-thru window, though.
Even though Jack Valenti dismissed VCRs as “a parasitical instrument,” they wound up being very good to studios. By the 1990s, half of all studio revenue was from the home video market. But there was a big change.
Once people had VCRs in their homes for years, the novelty started to wear off, and rentals experienced a decline. Studios kept pushing sell-through titles like Batman, which sold 13 million copies, and rushed to release them outside of the holiday buying season. But the days of coming out of video stores with an armful of rentals were history.
All told, the format survived for about 20 years before DVDs began encroaching in 1996. DVDs offered better resolution in a smaller and more attractive disc format. Not even something called D-Theater, which offered a high-definition picture on a VHS tape, could turn the tide.
Sony, for its part, had finally thrown in the towel and started manufacturing VHS VCRs in 1988, although they kept making Betamax machines through 2002 and Betamax tapes through 2016. Funai Electric made what was reportedly the last-ever VHS VCR in 2016, putting a bookend on an era that began with an argument over tape sizes.
Even though we now have thousands of movies available at our fingertips that can stream immediately in high-definition, VCRs aren’t totally obsolete. Horror movie fans have found that obscure titles are sometimes available only on VHS and have been known to pay a premium for vintage copies. Others are nostalgic for the days when we wandered through video stores, enticed by clamshell cases or cardboard boxes that promised action, comedy, thrills, and romance. Maybe you’d pick up something you never thought you’d watch. Maybe you’d meet someone special in the new releases section. Or maybe you just liked having a VCR so you’d never miss an episode of Knight Rider.
It may seem clumsy and clunky today, but Sony was right. VCRs really did allow us to break the time barrier.