By the late 1960s, tape formats had been extensively used in the professional industry for preserving and storing television programs. Nonetheless, prices were too high for the consumer market - but it became apparent to those in the industry that this technology had major potential in the consumer space, if they could find a way to scale it down to consumer-level affordability. The first attempt to create a unified standard for tape recording came in 1969, when JVC, Sony, and Matsushita all collaborated to create the U-matic format. Released in 1971, while this format remained relegated to the professional spaces due to runtimes and costs; it marked a major step towards the consumer tape format. That same year, JVC internally commissioned a team to develop a consumer tape-based format for recording - with 12 objectives on this format being set - emphasizing quality, compatibility, and value for the consumer. Spearheaded by JVC engineers Yuma Shiraishi and Shizuo Takano, the format development team began work late in 1971. The team went through many trials, facing budget cuts and nearly losing the project after a restructuring (the two lead engineers kept working in secret), but by mid-1973, a functional prototype of the Video Home System (shortened to VHS) was created, and was ready to take on the world.
While VHS was under development, U-matic's other inventors also realized the potential of a consumer tape format. Matsushita would begin work on the VX format, which would turn out to be short-lived given events that will come up shortly; but Sony would also begin development on a consumer tape format of its own, which would be known as Betamax - taking its cues more directly from U-matic from its tape transport shape. By the end of 1973, Betamax also had a functional prototype ready for consumers. Things would get confusing for consumers with the three tape formats if they released at the same time - and this was realized early on by the Japanese government. As a result, in 1974 Japan's Ministry of International Trade and Industry (or MITI) requested that one tape format be standardized in the country. Sony went to the MITI first urging to adopt Betamax as the standard, being the closest to format completion with its prototype. This did not sit well with JVC, feeling Betamax's recording capabilities and tape transport mechanisms were inferior to their VHS format - and wished for an open standard across competitors not requiring licensing of the standard from a singular entity. It was up to JVC to face the Japanese government and stop them from adopting Betamax as the standard.
Representatives from JVC began to talk to other companies to get them to adopt to their standard in mid-1974, which included Matsushita (and also JVC's majority shareholder) as their biggest target, who was not only the largest manufacturer of electronics back then in Japan, but also made electronics under the Panasonic brand in the United States, and most importantly had created the potential rival tape format VX. Luckily, such a potential threat was vanquished when Matsushita agreed with JVC over a monolithic, proprietary format not settling well with consumers - and agreed to drop their VX format in favor of VHS (though some work on that format did continue into 1976 internally). And with Matsushita's endorsement came three other manufacturers (Hitachi, Mitsubishi, and Sharp) to back the VHS format as well, with more to follow into 1975. Sony on the other hand, not only attempted to get companies onto their format (winning Toshiba along the way, and attempting to talk to both JVC and Matsushita in December 1974 to no avail) continued to push the MITI into adopting Betamax as the Japanese format standard, but in May of 1975 actually released their format in Japan to consumers - and that would surely get the MITI to agree with people actually being able to buy it, right? Unfortunately for Sony, the MITI was also paying attention to JVC's efforts at making VHS an open standard - and gave the alliance a much stronger footing than Sony in the negotiations. Thanks to the efforts, the MITI agreed to end their push for a unified standard late in 1975, clearing the path for JVC's format launch plans in the process. Ultimately, VHS would be introduced formally on September 9th, 1976 in Japan with the HR-3300 VIDSTAR VCR. Introduced by JVC's president at the time at the Okura Hotel in Tokyo, it cost about 300k yen at the time, and began sales around October 31 of that year in Akihabra.
More models from other companies shortly followed in late 1976 into 1977 in the country, and it was clear that while the battle at home, while no doubt was important, it would be even more critical to get the standard going worldwide, especially in America. Luckily, that Matsushita endorsement already got them one brand in the U.S. besides themselves, the Panasonic brand. But neither JVC nor Sony were messing around for finding international licensors for their formats - and the latter had already won over Zenith Electronics for Betamax, so JVC had to act quickly. They turned to their partners to help them out with finding VHS licensors - and in late February Matsushita began negotiations with RCA to adopt the VHS format. RCA, deep into development of their own video format (CED), while they were interested (hoping to recover their financial fortunes), wished to extend recording times beyond the initial two hours the original format had. An earlier meeting with RCA and JVC a year prior had RCA with a similar request, but JVC was unwilling to compromise on picture quality (by slowing the tape speed slightly). However, as a demonstration of nature of the open format standard, Matsushita made a prototype of such a slower recording speed being possible, which impressed RCA greatly (though it personally annoyed JVC as they were not asked to approve such a change). With the invention of the Extended Play recording mode, this officially got RCA to back the VHS format in March 1977 by rebadging Matsushita players, gaining VHS 36% of the US VCR market alone by 1978. JVC would ultimately launch the format in August 1977 in the United States with the HR-3300U VCR, a US version of the HR-3300. While costs remained high (the launch price was said to be $1039), the many manufacturers JVC had shepharded and partnered with quickly allowed for a fast gathering of VHS to become the standard there.
Later in 1977, JVC would release the HR-3300EK in the United Kingdom, with other partners across Europe continuing to be courted by JVC and their partners to license their format into 1978, though the PAL standards of broadcasting did cause some challenges. But all that hard work for JVC paid off, as by the dawn of the 1980s, VHS was leading the US market in terms of sales, and by the format's 10th anniversary in 1987, courted over 90% of all VCRs. The next year, Sony would finally cede the format war to JVC, manufacturing their first VHS VCR in the process.
It is worth noting here that this format was meant for personal recording of television broadcasts - not as a means of selling movies and TV shows...at least not initially. While 8mm and 16mm clips had been sold for home exhibition for a number of years prior to the advent of VHS as a sort of cottage industry, by and large this remained a niche field - but the aforementioned CED format RCA had been developing, along with Philips and MCA's joint collaboration known as DiscoVision (also known as LaserVision) were set to change this in the mid-late 1970s with a number of titles licensed from the various movie studios being available for purchase when the formats launched (especially Universal titles on the latter format, as MCA was their owner at the time). In 1976, with the introduction of the Betamax format in the United States late in the prior year, a Michigan man named Andre Blay flew out to Hollywood studios in search of making cassettes for their various film catalogs. Blay, 38 at the time, was a man with experience, though - being the founder and leader of a Farmington Hills-based film and tape duplication company named the Magnetic Video Corporation - who at the time, focused on producing industrial films and tapes for many corporations, and Blay helped produce these films in the process - so he was intimately familiar with how tape duplication worked. When he first saw the Betamax format, he immediately realized there was major potential to sell pre-recorded films on tapes, and thus began a quest to get studios on board to see his vision - but many of them rejected Blay's offer. Some of them (like the aforementioned Universal) already had plans of their own with other formats, while others (like MGM and Warner Bros) did not see any potential in the idea. There was, however - one taker, struggling studio 20th Century Fox, who agreed in September 1977 to license fifty of their pre-1972 catalog titles onto the Betamax and by then the newly-released VHS format.
20th Century Fox, while fresh off the success of major hit Star Wars in May 1977, was in major financial straits at the time and was willing to do almost anything to improve them, which included taking chances on relatively obscure video production units. Paying $300k to Fox and $500k yearly for the licenses, with Blay's experience and Fox's backing, he created the Video Club of America to help sell the releases through mail-order, in addition to wholesellers who were willing to handle orders worth $8000 and above, due to a high price for each tape ($50-70 each). In November 1977, the Magnetic Video tapes began to be sold, which proved to be a success - leading to more releases from the Fox catalog (as long as it was two years old and shown on TV by then), and Magnetic would begin to secure licenses from other studios, eventually landing contracts with Viacom, the Charlie Chaplin estate, and AVCO Embassy Pictures the next year, ABC Pictures and ITC in 1980, and in a major coup from another budding video manufacturer (VidAmerica), the United Artists catalog in 1981 (just prior to merging with MGM the next year). With the success of the Magnetic/Fox joint venture, Fox would outright buy Magnetic Video in 1979 for $7.2 million - but would keep Blay in charge until his departure in 1981 to form his own firm in video software, morphing into the genesis for 20th Century Fox Video in 1982.
Seeing how successful Magnetic Video was doing, other studios wanted in the home video pie - and thus starting in 1978-79, they began to either enter partnerships for manufacturing tapes for their catalogs or eventually, forming their own home video divisions entirely - with one major exception - Universal, or rather, their parent MCA. Seeing as how their expensive format launch of DiscoVision was effectively upstaged by Magnetic Video and other manufacturers, along with the nature of VHS's (and also Betamax's) recordability - they tried to sue Sony (for Betamax) to try to block copyrighted material from being recorded, to no avail. Eventually, MCA would go into the tape manufacturing business themselves in June 1980 after DiscoVision sales floundered. By this point, the home video market had become a highly profitable business market - in some cases even surpassing their initial theatrical runs! Yet the tapes remained expensive to purchase, ranging from $40 for old catalog releases all the way up to $100 for in-demand recent releases! Luckily, for those that couldn't afford the costs of purchasing the tapes - there was an option available for them - the video rental market.
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