What Caused The Downfall Of Betamax?

When a company introduces a new product, there is never a guarantee that it will be a hit with the public. Some variables such as determining the proper target market, packaging, advertising, and product quality all affect the eventual outcome of how successful a new product will be. According to Robert McMath of the Failed Products Museum, only about five percent of new products actually end up on store shelves (Jerome, 2000). Some additional factors that can be attributed to a new products failure are: it offered no advantage over the existing brands currently on the market, little or no interest from retailers to carry the product, lack of brand identity in an image driven category, ignorance of buyer behaviors, and misleading positioning of the products goal (Gruca, 2003). This paper will look at Sony Betamax, the evolution of the product, the demise of the product and what Sony could have done differently to make it a success.

Sony introduced the first Betamax combination TV and Betamax system in 1975 and the first stand-alone video cassette recorder (VCR) in 1976 as the model SL-7200 (CED, 2006). The stand-alone unit initially sold successfully in the U.S. for $1,295.00. An optional external clock to set recording times came at the request of Sony's then CEO, Akio Morita (CED, 2006). Previous models included an internal clock, but Morita believed that by having an external clock, should it malfunction, repairs could be made without having to bring the whole VCR to the repair shop. The external clock was mistake number one of many made by Sony; VHS (Video Home System) VCR's made by JVC hit the market in 1977 and offered an internal clock and much cleaner look, giving VHS a much needed marketing advantage. The interest in the Betamax product was very high when it was initially introduced, but extremely high costs eventually made many retailers hesitant to carry the product because of the limited consumers who could actually purchase such an item. To put these costs in perspective, the initial cost of the first TV/Betamax combo unit cost $2,295 in 1975, this with inflation would be approximately $12,000 today (Total Rewind, 2006).

Recording time length was a problem for the Betamax, as competing VHS systems could record two hours of programming compared to just one hour for Betamax. As improvements were made to both VHS and Betamax systems throughout the 1980's, the battle for market share continued. Betamax was able to extend recording times to five hours using new playback and recording speeds, only to be eclipsed by VHS systems that could record for up to six hours and eventually eight hours using an extended-play mode. Though Betamax was widely recognized as a superior product, VHS became the consumer's choice for home video recording because of the extended recording times. By the mid 1980's the VCR became an essential part of U.S. households, which led to an increase in demand for pre-recorded movies, leading to the development of the videocassette rental industry. Because more households chose to use VHS, the rental industry carried more options in the VHS format which eventually led to the phasing out of Beta videocassettes all together. By the late 1980's Sony recognized the trend and began manufacturing VHS VCR's, thus bringing the Betamax Era to a close. Sony continued to produce Betamax systems on a much smaller scale until completely halting production in 2002.

Delivering a product for 26 years seems hardly like a failure, but only very small