The document provides an analysis of the evolution of the VCR industry through various models and graphs. It begins with an overview of the VCR industry and its history from the 1950s development of early video tape recording technologies by companies like RCA, Ampex and Toshiba. It then analyzes the industry through political, economic, social and technological factors. Various graphs examine the industry in terms of timelines, price performance, organizational structures and life cycles. Key innovations from companies like Sony, JVC and Matsushita that drove the industry are discussed. Ampex is identified as a loser in the evolution due to a lack of business focus and adaptability as Japanese competitors commercialized the technology.

1. Analysis of the VCR Evolution:
- Praveen Adari

2. Introduction:
The following report presents an analysis of the VCR industry as well as a study of the growth of the industry with the
help of several models and graph structures. First, the overview of the VCR industry is presented and further the PEST
analysis is done for the VCR industry. In the Graph study, the VCR industry is analyzed on the basis of several graphs
one by one which will further describe the invention, innovation and growth of the industry, keeping competitors in
view. Then finally the Egg model is presented with one winner and a loser from the case. The overall conclusion and
understanding of the case is presented along with opinions of who is the winner and the loser, along with who is
neither a winner nor a loser in the summary section of the article.
Overview and History:
The development of the VCR and its evolution is almost the same as the evolution of the technology. In the early
1950’s, before anyone had invented a practical videotape recorder (VTR), extensive technical work was underway in
the laboratories of RCA and Ampex in US and Toshiba in Japan. Although some engineers in these companies
perceived that this video recording technique can be developed and can be made famous in mass market all these three
companies chose not to launch these products in the market. In 1951, David Sarnoff, Chairman of RCA had
challenged his engineers to develop a video recorder with in five years. The RCA teams were focused to develop a
narrow moving tape in between fixed magnetic heads. During this Toshiba, started developing the same and developed
a prototype video recorder and developed a device called “Helical Scanner”. In 1954, Toshiba filed it as patent.
Further Ampex developed VTR and did the public demonstration in 1956. But soon Ampex started sharing its
technical monopoly and slowly the competitors got into notice and monitored the same and found it essential
component to start about VCR. The rivals which entered the market to commercialize the product and all of them
happens to be Japanese companies, later became technological pioneers and emerged as winners in the evolution of
VCR.
PEST Analysis:
1. Political:
● Tax policy
● Employment laws
● Environmental regulations
● Trade restrictions and tariffs
● Political stability
2. Economical:
● GDP
● Economic growth
● Interest rates
● Exchange rates
● Inflation rate

3. 3. Social:
● Health consciousness
● Population growth rate
● Age distribution
● Career attitudes
● Emphasis on safety
4. Technological:
● R&D activity
● Automation
● Technology incentives
● Rate of technological change
Analysis:
Political environmental:
Political factors include government regulations and legal issues and define both formal and informal rules under
which the firm must operate. It is roles and regulation, which has been imposed by a stable government on the
business. The tax policies also affected VCR to grow slower as due to the reason to market the product in different
countries it was essential for the organization to follow the tax policies. The organization was opening the branches
and R&D departments in different countries so the employment laws were also affecting the organization in foreign
countries. Trade restrictions is also an important factor in which the countries political factors can affect the trading he
products between the two countries. Tariffs and conflicts between the traders due to political pressure is also a point in
which the company’s product growth rate is affected. Japanese government has been very supportive which led to the
development of VCR industry in Japan a profitable one.
Economical factors:
The GDP of the country in the economic growth trend of the particular country also affected in the way of the selling
rate of the product. The variations in the taxes and the interest rates also may affect the sale of the product. During the
development of the VCR the sale was restricted only to the filmmakers and few market segments due to which there
existed heavy fluctuations in the demand of the product. Due to the variations in the exchange rates and interest rates
the sale of the products were affected.
Social factors:
Social factors include the demographic and cultural aspects of the external macro environment. These factors affect
customer needs and the size of potential markets. Still needed to be well aware of the customer demand, good
communication with the people, changes in lifestyle of people, the increase on woman leaving work. These all are the
key factors which VCR needed to consider and must have social involvement in most needed things for the people
such as infrastructure system. People invested huge amounts in the initial period as there is only a single player and as
the product is mass-produced the interest among people has grown enormously, which also brought the prices down.
Other factor, which led to the evolution of VCR, is growing popularity of Television post second world war.

4. Technological factor:
Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence
outsourcing decisions. One of the four important factors, which are essential for the company to assess its external
environment is technological factor. And VCR worked around the technology every day and the development was
made and many companies were involved in the development of the same. VCR used new and upgraded technology in
productivity slowly and steadily, which gave VCR competitive advantages and leading market. By using the new
technology many companies did much of development in the manufacturing of the product through R&D in
Technological Innovation.
GRAPH STUDY:
1. Timelines
TECHNOLOGY DRIVEN
1951 - TOSHIBA along with NHK invented ‘Helical Scanner’
1956 - AMPEX first invented commercial model ‘Transverse Scanner’
1958- SONY, JVC started research using AMPEX model
1960- JVC introduced ‘Two headed helical VTR’
1961- SONY introduced ‘Transistorized VTR’
1964- MATSUSHITA introduced its first commercial model.
1960’s SONY, JVC, MATSUSHITA emerged technology pioneers
Late 1970’s - early 1980’s MATSUSHITA, JVC and SONY world leaders in VCR’S.
1971 –SONY’s U-Matic standard
1975- SONY’s BETAMAX standard of 1 hour tape length
1976- JVC’s VHS standard of 2 hour tape length
1977- MATSUSHITA adapted JVC’s VHS standard

5. MARKET DRIVEN
1956 – AMPEX First commercial model priced at $50,000
1962 - SONY PV-100 model
1971- SONY-“ U MATIC” priced at $1000 targeting mass market
1977- 7 other Japanese companies clubbed wither with SONY/JVC
1978- Sales reached 1 million units
1976-1981- Demand doubled annually
1980’s – Demand exceeded 30 million units/year
SOCIETY DRIVEN
1953 – MATSUSHITA acquired 50% ownership with JVC
1974-SONY’s plan to standardize Betamax, but JVC, MATSUSHITA and RCA declined.
1980’s- RCA, Ampex out of market
1984 and so on - Demand got slowed down with the emergence of other substitutes
2. Price Performance
Analysis:
From the above price performance it is clearly evident that the Innovation exists in various stages of the product
evolution. During the initial stages more emphasis will be on the product and American companies Ampex, RCA and
Japanese Toshiba were successful. Later when the Radical Innovation is needed JVC, Sony and Matsushita became
technology pioneers and have succeeded in commercializing a product for the mass market. In the recent times many
more advanced flash drives, Blu-ray discs i.e., Digital media completely overtaken the market. As the product
innovation increased over years of VCR development, the cost of the product has come down very drastically. The

6. initial commercial offering is around $50,000 and later other companies and later down drastically down from $1000 -
$500 which is in the Radical and Micro radical Innovation phase where competitors are manufacturing it for mass
market and looking for a Competitive advantage.
3. Tree Structure Diagram
Tree Diagram below is explains the structure f the VCR evolution.
Analysis:
The VCR evolution started with an intention of developing a model, which can play audio, video, still images. This
invention started with key efforts by both Japanese and American Engineers and the VCR has changed its forms
during its development and the tree diagram gives a glimpse of its evolution. Initially the devices are designed using
Reel to Reel videotapes which are called Video Tape recorders (VTR) and later used cassette tapes. The Helical
Scanner introduced by Toshiba has been a benchmark in the industry until Sony introduced u-matic format. From u-
matic design, Sony modified and introduced Betamax to be used as an industry standard whereas it was rejected by
JVC/Matsushita, which later came up with VHS format, which was more successful than the Sony’s Betamax. After
the VCR industry lost its sheen in the entertainment industry the Laser Disc became more used as it is cheaper and
offers better quality. Later VCD, DVD and in 2009 after Bluray is introduced it has became a standard as it offers the
best in terms of Quality and space mostly used for High Definition and Ultra High Definition video viewing
experience.

7. 4. S Curve/PLC Curve:
Analysis:
The product life cycle has 4 very clearly defined stages, each with its own characteristics to manage the life cycle of
their particular product.
Introduction Stage:
This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for
the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things
likes research and development, consumer testing, and the marketing needed to launch the product can be very high,
especially if it’s a competitive sector. Toshiba, RCA and Ampex can be considered at this stage as First to Market
entrants. At Introduction stage RCA, Ampex and Toshiba used the available technology using four recording heads for
the invention of the helical scanner. During this stage Ampex and Toshiba collaborated which enabled Ampex to
Japanese market and Toshiba to enter into Broadcasting VTR market, ending the control of product development to a
single company.
Growth Stage:
The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start
to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will
increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the
potential of this growth stage. Here at this stage SONY, JVC and Matsushita evolved. They started research and were
able to launch their products in quick successions through investments in R&D and through thorough marketing of the
commercial product exclusively for mass market. Different formats like JVC’s VHS standard and Sony’s u-matic and
each competitor, who became Industry standards later in the growth stage, introduced Betamax standard.
Maturity Stage:
During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market
share they have built up. This is probably the most competitive time for most products and businesses need to invest
wisely in any marketing they undertake. Product modifications or improvements to the production process, has given a
competitive advantage to the Japanese companies. By this time the American companies could not sustain the
competition and abandoned their research leaving the market to the Japanese. Later sudden stagnancy was clearly
visible in the VCR industry and no one predicted the fall of the VCR industry.

8. Decline Stage:
Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage
could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased
it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may
still be possible for companies to make some profit by switching to less-expensive production methods and cheaper
markets. Finally the VCR industry was falling. The demand was reduced drastically by late 1980’s at which the
demand rose to 30 million units/year. Products like DVD, CD flash drive and other user friendly and convenient
devices were in market, which mostly killed the market of VCR.
5. Product and Process innovation
Analysis:
Toshiba is the first company to design a Helical Scanner, which is considered a product innovation followed by
Ampex, which used Transverse Scanner to develop Ampex VTR its cost very high, and also the first commercially
successful model. Later other firms studied Ampex model (Sony, JVC, Matsushita) then they started innovated and
started designing the products for the mass-market distribution. During 1970’s Sony developed new product U- matic
which is low cost effective -process innovation, later they developed Betamax product which gave Sony competitive
advantage in the market .In 1976 JVC came up with ‘video home system’ (VHS) a process innovation which has
become a standard for both JVC and Matsushita.

9. 6. Transilience Map
Analysis:RCA, Ampex and Toshiba understood the importance of Technology and have become pioneers in the early
period where they were able to produce the Helical and Transverse scanners, but later they did not look into mass-
producing the product. JVC’s VHS Format standard and Transistorized VTR has been a Niche Innovation, which was
developed from Scanner built by Ampex by reducing machine size, cost and tape consumption. Later many
innovations with slight modifications like 2 headed, single headed, ½ inch tape models, which can be considered
Regular Innovations. The Sony’s Betamax and u-matic format have become the standards for the VCR industry ever
since and all the manufacturers have started to adapt these formats which is a Revolutionary innovation.

10. 7. Egg of Innovation: Presented the egg of innovation for one winner, one looser and the one which is
identified as neither winner nor loser. The key aspects are briefly described as follows.
Sony: Stuck in the middle
Analysis: Sony has been a crucial player during the growth phase of the VCR product life cycle. They have been very
much successful than any other company in this era and were even successful in commercializing the product for the
mass market. The support from the top management (founders Ibuka and Akio) as well as from Japanese government
has led to the successful launch of the u-matic and Betamax standards. But due to the heavy competition from the
alliance of JVC/Matsushita has led to its downfall in the VCR format war between the revolutionary Betamax and
JVC’s VHS. Ultimately, as JVC offered 2 hr recording it had gained more popularity over the 1 hour Betamax
cassette. It is always important to have a 2 hour recording length which Sony couldn’t understand until JVC
established a monopoly in the market. By that time Beta II emerged with 2 hour recording tape, it was too late for
Sony to compete and hence it is regarded as the company which succeed and failed as well as it did not understand the
requirements of the consumers clearly which JVC did.

11. JVC- Egg of Innovation for One of the winner
Analysis: JVC along with other competitors SONY, Matsushita, Toshiba started to commercialise the VCR for the
mass market during the growth phase of the product evolution. The competition is very stiff as all the Japanese
companies are receiving the same support from the company as well as government agencies which are funding them
to commercialise and standardize the product. The company’s policy to make an alliance with Matsushita clearly made
a difference for both the companies as they have a good exchange of ideas in product design. JVC’s project manager
from the R&D set-up a secret lab for the product design which resulted in niche innovation VHS standard after 5 years
of extensive research which clearly stood out from the competitors for its qualitative and a quantitative offering. They
saw the opportunity that a movie or a game would require more than 1 hour of tape length and succeeded in their
innovation and stood as the winner of all the competitors.

12. Ampex- Egg of Innovation for One of the Looser
Analysis: Having a first to market advantage Ampex is not able to sustain and innovate more competing with the
Japanese companies. The support from the managers in commercialising the product is one of the key factors which
led to its downfall in the competition as they did not believe in the mass market production. It relied mainly in the
Broadcast studio market and did not innovate much in the product design. But the time when it started working in
commercialisation due to the stiff competition from JVC and SONY did not allow it to sustain and eventually lost and
remained dead in the market. Even their engineers were not able to deliver in time despite knowing the need in the
market. They also believed that they could not compete and rather started to concentrate in other business portfolios
leaving the market to the others.
8. Six successful factors: The six success factors were discussed among the companies in which one
winner, one loser and neither winner nor loser company is presented as follows.
Ampex - One of the loser’s
1.Business Focus
- Technological sophistication
- Have diversified their attention towards other Business which they considered more profitable then VCR.
- No focused viewed on the VCR market in the later stages of evolution

13. 2. Adaptability
- They have completely lost in the race to the Japanese competitors in commercializing the product.
- Management did not believe in their Engineers in case of RCA and for Ampex, the financial crisis in other Business
leads them to withdraw.
- Did not compete with the Japanese players leaving the well-started product innovation and having first to market
advantages among the competitors.
3. Organizational Cohesion
- Creativity and Planning worked well in the Introduction phase of the product development and it ceased during the
later stages due to focus on other Businesses such as consumer audio products, computer peripherals and magnetic
recorders in case of Ampex. For RCA they were having a stiff competition from companies Zenith, Texas instruments
and IBM over other businesses.
4. Entrepreneurial Culture
- This is clearly missing as after they were initially successful and besides being technological pioneers could not
make much profit later in the evolution.
- Management focus is mostly centered in selling the existing product design which is more bulky and not affordable
to wider audience. This has led the competitors take over the market monopoly established by Ampex especially in the
United States.
5.Sense of Integrity
- Engineers did not deliver expected results in time and also the management support is negligible during the critical
phases.
6. Hands on Top Management
- Management did not believe in their engineers and due to this lack of support to further develop the existing model,
Ampex failed miserably after spending much capital as the first to market company.
JVC - One of the winner’s
1.Business Focus
- Initially aimed at home market
- Commercializing the product for the mass market
- Focused on closely related tasks and
2. Adaptability
- Top management from JVC have been closely monitoring the development of the product and have prioritized
activities for bringing up their own format 'VHS' rather than using already available 'Betamax' format.
3.Organisational Cohesion
- Had an organizational structure for the product development and established individuals teams to focus on design
and technology innovation.
- This resulted in developing VHS.

14. 4. Entrepreneurial Culture
- Clear management focus in commercializing the product.
- Product launches at crucial time where VHS standard even bypassed the Betamax standard both in terms of cost,
quality and length of recording which are considered the key selling features of the VCR. The initial quality was
somewhat lesser than Sony’s but later through the introduction of HQ VHS with a resolution of up to 250 lines
5. Sense of Integrity
- This is the key success factor in case of JVC as the management had taken keen interest and launched a new R&D
project team of 2 people which worked to develop a VCR which costs around $500 using as less tape as possible with
better quality which resulted in VHS design after 5 years. This belief in their Engineers had led them design the best
VCR standards ever.
6. Hands on Top Management
- Constant support from the Top management as well as the Governmental agencies (MITI) supported throughout the
developmental cycle and assisted in funding as well.
- Constant upgrading to the industry standards in terms of development, design and technological aspects of the
product.
Summary of the Case:
American and Japanese companies competed with each other where American companies RCA, Ampex and Japanese
company Toshiba dominated in the initial period and brought in a lot of technological innovation in the evolution of
the VCR, but they were not able to commercialize the product for the mass market and even the management did not
believe in it. The rivals who entered the market later dominated the competition and finally emerged as winners by
constantly upgrading the product design and making it a commercially successful product for the mass market which
American companies did not think of when they pioneered in this field.
SONY, JVC and Matsushita Management have viewed the home-VCR development as an opportunity and mastered
the technology, supported their Engineers (MITI) throughout the development until they emerged victorious. Sony’s
Betamax and JVC’s VHS formats have become standards for the VCR industry, later JVC/Matsushita adapting the
VHS format emerged successful of all which had also become supplier to other OEM’s. Going down the lane in the
war between these standards, VHS emerged successful, which is having longest time for recording. Till date the
competition among the Japanese Technological pioneers was intense in the home entertainment industry and was able
to succeed only because of the strategic consistency over the years and long-term focus to master various technologies.
The various models used in analyzing the case gave an idea of how the evolution of product took place in terms of
technology, strategy and development, positioning and marketing of the product.