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US marketplace may decide winner in Japanese battle of the video discs

By Geoffrey MurraySpecial to The Christian Science Monitor / November 28, 1980



Tokyo

The United States is becoming a battleground for Japanese electronics manufacturers. Their objectives: to settle which of at least three completely incompatible systems will dominate the expected future booming market for video disc players.

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The third contestant in the coveted American video disc market has just emerged.

Japan's Victor Company (JVC), its dominant shareholder Matsushita Electric (National Panasonic), Thorn EMI of Britain, and America's General Electric have agreed to form a joint venture company to make the player, the disc it will play , and to acquire and develop the necessary programming.

RCA Corporation, which ironically founded JVC but sold out to Japanese interests before World War II, plans to put its own system, "Selectavision," on the market early next year.

But both JVC and RCA have been preempted by Magnavox, a unit of the Phillips Corporation, which has already begun selling a player developed by its parent company in Holland.

The three rivals are playing for big stakes. US retail sales of video disc systems are predicted to reach almost $9 billion within the present decade.

Other electronic companies are watching the US struggle closely.

Some have already begun to protect their options by obtaining licenses to use the necessary technology from one, two, or even all three of the rival systems.

This is necessary because they are totally incompatible. A disc developed by RCA, for instance, cannot be played on a JVC machine, which uses a radically different technology.

At some point, there have got to be some losers. The battle just beginning in the US will probably decide the issue for Japan and for much of Western Europe as well, according to industry analysts here.

The risks are high, and many of the big Japanese names are trying to stay on the sidelines to see which way the wind blows.

Says Sony executive Kzo Hiramatsu: "This is basically untried technology. The situation is changing every day. So this is the time to wait and see.

"Anyway, companies like Sony are seeing a tremendous expansion of video recorder sales and don't want to spoil that by offering something only slightly different."

The drawback of the videodisc player is that it cannot record -- a major demerit for, say, American football fans -- and can play back only commercially produced material.

Its merit is a technically superior picture to anything on offer from video tapes.

So the range of programming available, will be especially important for early video disc system sales.

Buyers of Japan Victor's VHD (video high density) system will be able to choose from 160 feature films and 40 special interest programs initially.

RCA has said it will offer an intial catalog of 150 titles and add frequently.

One reason most Japanese companies haven't rushed into the Amarican market -- the only one really developed so far -- is the fear of insufficient programming. This is where JVC and Matsushita will lean havily on their American and English partners for support.

Industry analysts believe price will be important at the start -- favoring the American and European entries -- but that consumers will become bored after two or three years and demand a more sophisticated product JVC believes this is where it will win the whole sweepstakes.

In Japan, the only company to announce plans for domestic marketing of a videodisc system, is Pioneer Electric Corporation, a Phillips licensee that has no competing video tape recorder line.

Matsushita has responded by persuading two other companies, Toshiba and Sharp , to adopt the VHD technology.

But industry analysts say it is still early, and the shape of the future competition in Japan will be determined in large part by the behavior of the American consumer.