How would you explain the triumph of VHS over Beta?

VHS triumphed over Betamax because they made the right partnerships within the industry which allowed them to take advantage of the bandwagon effects of a new innovation being released to the mass market. JVC had the presence of mind to realise that in this situation market control was more important than reputation, and once they made the first moves towards domination of the market, it became exponentially more difficult for Betamax to regain market share.

Betamax vs VHS

This case outlines the potential advantages to being a late entrant, or a second mover to an industry. JVC followed the first mover quickly enough to neutralise its advantages. Meanwhile, they had more time to plan for manufacturing, distribution, licensing, or the use of complementary products and services. They also benefited from the mistakes or inflexibility of the first mover as the market develops and the technology changed. In a mass consumer market, the time required to create a dominant standard may be so great that first-mover advantages are minimal, especially for products subject to bandwagon effects and network externalities
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Second Mover Advantage

In April 1975, Sony’s Betamax had an overwhelming lead over JVC’s VHS. The company had a strong reputation globally as an innovator and leader in consumer electronics, while JVC, a smaller player in the industry, was still struggling to perfect VHS prototypes that offered few technological advantages. Two years later, although Beta still enjoyed a lead, JVC, supported by Matsushita, set in motion the forces that would erode, and then snuff out, Beta's share of a massive global market. An essential was JVC's more effective campaign to form an alliance behind VHS. This resulted in a coalition that matched the Beta family in global market power. Matsushita exploited its generic skills in mass production and substantial previous experience in VCR manufacture by establishing production capacity for the VHS that exceeded the combined capacities of all other Japanese VCR producers. JVC, meanwhile, moved aggressively to bring leading European consumer electronics firms into the VHS family, almost pre-empting that market from Beta.

Industrialist Matsushita

JVC's early success in aligning itself with Matsushita and other Japanese producers allowed the company to gain a crucial advantage in the race for distribution rights. Sony's unwillingness to be an Original Equipment Manufacturer supplier, and its underestimation of the threat from VHS, left Beta in a bad position for potential market power in North America, Western Europe and Japan. Once VHS took the lead, it became more and more likely that it would continue to gain market share year after year. The final contest, among producers and distributors of video software, accelerated this process, while the dominance of VHS in tape-rental channels ensured Betamax would not survive even as a second format.

Sony being a Original Equipment Manufacturer Supplier

Although Beta had reached the market first, with a 58 percent share, it thus fell behind VHS in 1978. For the next six years, sales of Beta-format VCRs increased every year, even as its share of the worldwide market fell every year, and it then began a rapid decline to extinction. The actions of each of the companies made sense in context. Sony behaved in the same way that had brought it great success over the last 20 years, while JVC, the underdog, was more humble and flexible in its relationships. Had the market grown more slowly, as had been expected, Sony might have been able to respond more effectively to its early mistakes and to the actions of its key competitors.

Flexibility

Interesting parallels can be drawn between this case and the high definition disc format war more recently, when Sony seemingly learnt from its mistakes and came out on top of HD DVD with Bluray. This meant making the right partnerships to form a large alliance of companies behind the product in order to increase capacity, maximise distribution and dominate market share globally as the market grew.