RC Passage: VHS

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Traditionally, the first firm to commercialize a new technology has benefited from the unique opportunity to shape product definitions, forcing followers to adapt to a standard or invest in an unproven alternative. Today, however, the largest payoffs may go to companies that lead in developing integrated approaches for successful mass production and distribution. 

Producers of the Beta format for videocassette recorders (VCRs), for example, were first to develop the VCR commercially in 1975, but producers of the rival VHS (Video Home System) format proved to be more successful at forming strategic alliances with other producers and distributors to manufacture and market their VCR format. Seeking to maintain exclusive control over VCR distribution, Beta producers were reluctant to form such alliances and eventually lost ground to VHS in the competition for the global VCR market. 

Despite Beta's substantial technological head start and the fact that VHS was neither technically better nor cheaper than Beta, developers of VHS quickly turned a slight early lead in sales into a dominant position. Strategic alignments with producers of prerecorded tapes reinforced the VHS advantage. The perception among consumers that prerecorded tapes were more available in VHS format further expanded VHS's share of the market. By the end of the 1980s, Beta was no longer in production.

The author implies that one way that VHS producers won control over the VCR market was by


carefully restricting access to VCR technology


giving up a slight early lead in VCR sales in order to improve long-term prospects


retaining a strict monopoly on the production of prerecorded videotapes


sharing control of the marketing of VHS format VCRs


sacrificing technological superiority over Beta format VCRs in order to remain competitive in price

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