Share this story
Close X
Switch to Desktop Site

A shoot-'em-up TV script; Cassettes for recording have giants facing off

''I am the Wilbur Wright of videocassette rentals,'' boasts George Atkinson. In 1977, Mr. Atkinson opened Video Station, a shop where Los Angeles residents could rent movies on videocassettes. He says it was the first such outlet in the nation. Now there are some 5,000 stores where owners of videocassette recorders (VCRs) can pick up anything from a squeaky-clean Disney movie to raunchy X-rated fare.

Cassette rentals, which now outpace sales by at least 10 to 1, are just one facet of the sprawling industry that has sprung up around VCRs. After a slow start in the late '70s, VCRs are being grabbed off appliance dealers' shelves at a rate of 1.5 million a year. ''That is 81 percent ahead of last year,'' says David Lachenbruch, editorial director of TV Digest.

About these ads

The VCR sales picture may be bright, but the industry is far from calm. In many ways, the video business resembles an old-fashioned shoot-'em-up western, with:

* A battle between incompatible VCR technologies.

* A slugfest among some 15 VCR brands.

* A threat to VCRs from videodisc players which have recently come to market. Unlike VCRs, videodisc players do not offer recording capability, but they are cheaper than VCRs.

* A legal duel between VCR manufacturers and producers of television programs that VCR users record.

In the court battle, the Ninth Circuit Court of Appeals held this week that makers and distributors of VCRs are liable for damages if the devices are used to tape copyrighted on-air programs. The ruling came in a suit MCA Inc. and Walt Disney Productions filed in 1976 against against Sony, a VCR owner, and several retailers that sell Sony's Betamax-brand VCR.

The TV producers argue that the value of their programs is diminished if VCR owners can record TV fare for future use.

About these ads

Sony's managing director, Naozo Mabuchi, called the decision an ''anachronism'' and vowed to ''fight to the last moment,'' which in this case means an appeal to the US Supreme Court.

Analysts and industry participants think the decision will not be more than a fleeting blip on the VCR sales scene. ''It is a non-event in the realistic scheme of things,'' says Barbara Isgur, an analyst at Paine, Webber, Jackson & Curtis.

With some 3.5 million VCRs already in users' hands, a Supreme Court decision upholding the appeals court would likely be overturned by Congress, industry observers say. While Congress might impose a fee on blank cassettes to compensate TV producers, it is highly unlikely it would allow a ban on sales of VCRs with TV taping capacity.

One reason a ban would be unpopular is that at least 70 percent of all VCR sales can be traced to the buyer's desire to tape programs off TV.

By the time the legal appeals process is exhausted, ''you would have a lobby of 5 to 10 million VCR owners who are politically important,'' notes Mr. Lachenbruch of TV Digest. ''

While the VCR industry presents a united front to external foes, the battle within the industry rages. The fight pits Sony's ''Beta'' technology against another Japanese giant, Matsushita, with its ''VHS'' (or video home system) approach.

Sony, which invented the VCR, has lined up four other companies, including Zenith Radio Corporation to sell Beta machines. Ten companies are licensed to offer Matsushita's technology, including RCA.

The sales breakdown is ''70 to 30 in favor of VHS,'' according to George Kopp editor of the magazine Video Business Monthly . Beta is still suffering from a recording-time disadvantage against VHS. When VHS machines were first introduced , they offered two hours of recording time, double the Beta machines' limit. Now VHS machines can record 6 hours on one tape, while Beta devices stop at 51/2.

Most observers think the Beta and VHS technologies are closely matched in picture quality. Nevertheless, RCA is the clear sales leader, with its VHS machine, and controls 35 to 40 percent of the total market, according to TV Digest estimates. Panasonic is second, with 15 to 20 percent, and Sony third, at 10 to 15 percent.

Ironically, RCA is also the main force behind the introduction of videodisc technology which competes with VCRs.

So far RCA's SelectaVision sales have been disappointing. Only 50,000 have been bought, although the company has the capacity to build 500,000 units before the end of the year. Sales have been similarly slow for competing laser-based disc systems offered by North American Phillips Corporation's Magnavox unit and U.S. Pioneer Electronics Corporation.

''It is too early to tell'' if videodiscs will catch on, says a Drexel Burnham Lambert analyst, John Reidy. But several videodisc cost advantages are eroding. VCR manufactures have brought prices closer to the $500 list price for basic disc machines.

And since VCR cassettes can now be rented for $5 to $8, ''the fact that a disc costs only $25 while a (prerecorded) VCR costs $50 does not mean much.''

As the VCR rental business expands, it is also changing. The bulk of VCR rentals used to be adult fare. With an expanded number of recorded movies now available, most shops report that 25 percent or less of their rental business is in soft-core pornography. Richard Silver, owner of ''Movies to Go'' in Newton, Mass., says: ''I am not looking to run this place as a peep show. This is a video and computer shop.''

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.