Bye-bye Betamax


The video format wars may be long since concluded, but the iconic Sony Betamax refused to die. Until last week, when it was announced, that after 40 years of production, it was finally being retired. Production will cease next March.

Magnetic tape has gone the way of the digital dodo, as faster and better technologies have emerged.

But there was a time, in the 1970s and 1980s when the video cassette recorder (VCR) first emerged, when Sony was the coolest company in the world. It had two killer products, Betamax VCRs and the Walkman.

The Betamax recorder ushered in this new world of on-demand viewing. By recording live television, it started the transformation of how we consume television. “watch whatever whenever” read an early Sony advert, extolling this new virtuous ability to watch shows later. Instead of being glued to the set – something that now only happens for sport or last week’s horrific Paris attacks – people could watch the show at their leisure.

It would also enable handheld cameras and home movie recordings that would lead, ultimately, to today’s sharing-to-social-media culture. Along the way it also kick-starting two other not insignificant industries, wedding videos and the porn business.

But Sony was to make a strategic mistake that would see it ultimately lose the VCR format war to its rivals because it insisted on a higher licencing fee for other manufactures to make VCRs.

With Betamax, Sony had a superior product, with better picture quality and a more compact cassette. It was used by the television industry for decades, only recently retired as new digital cameras, and storage devices like SD cards, evolved.

VHS was an inferior technology and had a bigger cassette. But its maker, another Japanese firm JVC, offered cheaper licencing fees. As a result, more manufacturers produced VHS devices, swinging the tide against Sony, which had pioneered the technology wave it was now losing out to. Sadly, the same thing would happen with portable music players, which the Walkman pioneered, with Apple’s iPod.

With Betamax, the superior technology lost out to the cheaper technology. It was a sign of things to come in a consumer electronics industry that was just beginning to bloom in the 1980s.

When the next format wars – for higher density DVD discs – developed this century, Sony’s Blu-ray would emerge the winner. But it was a pyrrhic victory. Blu-ray might have won that round, but physical storage rapidly lost out to the internet. Last week it was announced that 36.5% of all North American internet traffic is Netflix, according to researchers SandVine.

Sony’s siloed business units (its music arm, studios, television and hardware manufacturing) would all fight each other until it was too late. Apple had already stolen a march with the iPod, and later the iPhone, leaving the once-mighty innovator reeling. Just as it seemed then CEO Sir Howard Stringer seemed on the brink of turning the tide, consolidating all the businesses and aligning it towards a mobile future; when disaster stuck. Literally. The devastating 2011 tsunami wrecked Japan’s coast line, caused a nuclear power station to melt down and pretty much did the same to Sony’s business.

Sony sold its well-known Vaio laptop division, then spun off the loss-making TV business in February 2014, as it struggled to compete against more aggressive rivals, particularly Samsung. A year later Sony spun off its audio and video divisions.

It disinvested most of its business units from South Africa – leaving behind only its mobile division, which continues to make some of the finest Android smartphones. Its Xperia range are beautifully designed, waterproof phones that can stand a half metre dunk for an hour. And still take amazing pictures, above or below the water.

The VCR format wars would define later disputes over new technologies. It showed that superior technology wasn’t always better – especially when it was competing against cheaper technology. It was one of many key business decisions that the Japanese firm would make that would ultimately end with Sony’s humbling, an ignominious end for a once illustrious and innovative company.


About Author

Toby Shapshak is editor-in-chief and publisher of Stuff, a Forbes contributor and a Financial Mail columnist. He has been writing about technology and the internet for 20 years and his TED Global talk on innovation in Africa has over 1,5-million views. He has written about Africa's tech and start-up ecosystem for Forbes, CNN and The Guardian in London. He was named in GQ's top 30 men in media and the Mail & Guardian newspaper's influential young South Africans. He has been featured in the New York Times. GQ said he "has become the most high-profile technology journalist in the country" while the M&G wrote: "Toby Shapshak is all things tech... he reigns supreme as the major talking head for everything and anything tech."

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