Lessons From the Past

Ever since Media Play News launched in January 2018, our mission has been to look ahead and not only keep our readers up to date with the latest home entertainment news, trends and development, but also to anticipate what is to come.

That’s why we report so generously on research and data analysis that tries to make sense out of where we’re going.

And yet, from time to time, it’s healthy to take a look back. We did it in our April 2019 feature on the history of 20th Century Fox Home Entertainment just as the fabled studio was being swallowed up by Disney, and, more recently, in our two-part series on 25 years of digital entertainment, which began with the March 1997 U.S. launch of DVD.

Sometimes, things come full circle. Historical articles present us with lessons we can apply to future challenges or opportunities. As the great writer and philosopher George Santayana once said, “Those who cannot remember the past are condemned to repeat it.” In our history of digital entertainment, for example, the overriding takeaway is to never let the quest for short-term profits get in the way of long-term strategy.

In this month’s feature we take a look at 10 of the most notorious failures of the home entertainment era — and each one, I hope, has a lesson of some sort. In the early 1990s, hoping to get a jump on putting movies on a five-inch disc, Philips put a lot of time and money into developing the CD-i and Video CD. But both formats were half baked and never really caught on with the public; they were smaller and more convenient than the clunky videocassette, but the quality didn’t impress. Just a few years later, the DVD delivered the much-needed “wow” factor, underscoring the fact that it’s best not to rush things.

Then there was RCA’s ill-fated SelectaVision, a 12-inch analog vinyl disc that played movies, TV shows and other filmed content. Fifteen years and $200 million in the making, the product was launched just as that other 12-inch analog vinyl disc, the music LP, was being phased out in favor of the CD.

The bad timing curse hit again a decade and a half later with the emergence of Digital VHS, the videocassette’s last stand. Digital VHS promised true high-definition content, unlike the DVD, which had launched the year before, in 1997. But with everyone but Fox pushing the digital video disc and consumers salivating at the prospect of buying new movies three months after their theatrical debut instead of only being able to rent them on VHS, Digital VHS never even had a chance.  

It could be argued that every new technology that comes along is a failed technology, since sooner or later everything becomes obsolete. But that’s not really true. VHS had a long, successful run and is what gave the home entertainment business its start. The LaserDisc allowed movie fans to buy and collect movies on an archival format long before DVD. And while DVD and Blu-ray Disc sales are a fraction of what they once were, both formats enjoyed remarkable success and are still being produced today.

The 10 “flops and follies” that are profiled in this month’s feature all had very limited lifespans, and were done in not by advancing technologies but, rather, by inherent flaws in either the product itself or in the marketing, the concept, the presentation or the timing.

What Were They Thinking? — 10 Home Entertainment Format Misfires

In a year that marks the 25th anniversary of the U.S. debut of the DVD, the most successful consumer electronics product launch ever, we felt it would be fun to turn things around and take a look at 10 home entertainment products that failed just as spectacularly.

Remember the CD-i, the first attempt to put movies on a five-inch digital disc? It worked pretty well — except for the fact that the blacks weren’t black and you needed at least two discs to hold even a short movie.

Or Divx, the pay-per-play DVD variant that was more of an ego-stroke for the head of the Circuit City retail chain than anything else?

And what about RCA’s SelectaVision video disc and Digital VHS, both of which were victims of most-unfortunate timing? One was a 12-inch analog disc that was launched just before vinyl LPs were being phased out in favor of CDs, while the other made its debut right when we were told that tape was obsolete and disc was the way to go.

Here, then, is the flipside of the DVD success story.

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Betamax: The Better Man Doesn’t Always Win

The early days of the home entertainment business were marked by the swift rise of the videocassette rental market, triggered by entrepreneur Andre Blay’s 1977 licensing of 50 20th Century Fox movie titles for release under his Magnetic Video banner.

But the fledgling business’ growth was initially hampered by a cassette format war between Sony’s Betamax and JVC’s Video Home System, or VHS. By all accounts, Betamax was the superior format, with slightly better resolution (250 lines versus 240 lines) and sound and a more stable image.

But there were two problems: When it was launched in 1975, Betamax could only hold one hour of content, compared with two hours for VHS when the latter was launched in 1976. On top of that, Sony didn’t want to license its technology to other manufacturers, which limited the supply of players and kept prices high — in contrast to VHS, which was an open format.

Betamax’s capacity was subsequently expanded, and in the early 1980s Sony decided it would, after all, let other manufacturers make Betamax players. But by then it was too late: The video rental market was exploding, and VHS was by far the dominant format, with VCR players accounting for 75% of the machines sold by 1981. Sony stopped introducing new Betamax models in 1988, although it wasn’t until 2002 that the company quit making Betamax players entirely, according to Ars Technica. Betamax tapes, however, were still being made for sale in Japan only until November 2015.

Consumers can still buy used Betamax players on eBay for less than $100, while tapes are generally priced at $10 and up — although rare titles can fetch upwards of $1,000. The original MGM/UA Betamax release of The Wizard of Oz, for example, is selling for $4,050.

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SelectaVision VideoDisc: Timing Is Everything

It was the early 1980s, and the home video business was booming. Consumers were flocking to video stores to rent the latest movies on videocassette, and consumer electronics companies such as Philips, Magnavox and Pioneer were busy pushing a follow-up format to the VHS VCR called LaserDisc, which offered consumers the chance to buy movies on a 12-inch optical disc read by a laser.

It was into this environment that RCA in 1981 launched what it called SelectaVision, a 12-inch analog vinyl disc that played movies, TV shows and other filmed content. Fifteen years and $200 million in the making, Selecta-Vision launched in March with a $20 million advertising blitz. Early ads show a beaming young boy standing next to a Selecta-Vision player atop a TV, while a headline screamed, “The remarkable home entertainment system that plays sound and picture through your own TV — from records.”

With the advantage of hindsight, we can only wonder, “Why?” The Compact Disc (CD) was just one year from launch, founded on the same technologies and concepts as LaserDisc. And here was RCA, trotting out a vinyl record that played movies instead of music through a diamond stylus. And as with a vinyl LP, users could pick up the needle and scan ahead — at the risk of scratching and damaging the record, however.

According to a March 2012 Wired story, “critics were nonplussed. Some called it the least-exciting video-disc system available. Playing off RCA’s nickname for SelectaVision — Manhattan Project — Michael Schrage of New York Magazine wrote: ‘A number of people expect the result to be like the Manhattan Project — a bomb. The reason is the technology.

SelectaVision is a ‘grooved capacitance’ technology, and that pretty much relegates it to the Jurassic era in terms of state of the art.’”

In August 1981, just five months after SelectaVision’s launch, Billboard ran a story headlined “Dull summer for SelectaVision,” in which several retail clerks bemoaned the format’s lackluster sales. One told Billboard, “There was a lot of interest at first, but no one’s even asked about the product in several weeks … Most people who come in to look at the disk player end up buying a VCR.”

In its first three years, the Wired story says, RCA sold only about 550,000 players, and by April 1984 it was over. “The company lost about $580 million on the project,” according to the Wired story, “and the losses crippled the company so much that General Electric later took it over in the U.S.”

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CD-i Digital Video: Too Little, Too Soon

Before the Internet, there was CD-ROM, a CD with data, pictures and other information that could be used to distribute games, software and even an encyclopedia for use on a computer. In 1991, Dutch consumer electronics giant Philips took the CD-ROM concept one step further with the introduction of the Compact Disc-Interactive, or CD-i, which was initially marketed as a multimedia entertainment console but failed to make much of a splash. Less than two years later, the format was enhanced to hold up to 72 minutes of full-motion video under the CD-i Digital Video name, and amid much fanfare Philips announced a deal with Paramount to distribute the studio’s movies on CD-i.

It was four years before DVD, at a time when the prospect of watching movies on a five-inch disc similar in shape and size to the audio CD was tantalizing to studio executives as well as consumer electronics manufacturers. And yet save for MGM and PolyGram, no other major studio followed Paramount’s lead. Few films could be contained on a single disc, and switching discs in the middle of a gritty action or passionate love scene brought back bad memories of the eight-track tape. On top of that, the MPEG-1 compression technology of a CD-i movie resulted in picture quality that was inferior to VHS, and sound that was dulled at the highs and the lows. Some consumers also complained that the blacks weren’t really black.

Within a year, Philips abandoned CD-i hardware and instead emphasized the Video CD, which had been developed around the same time in partnership with Sony and others and sold primarily in Asian markets. A short time later Philips and Sony began work on the Multimedia Compact Disc, or MMCD, with much-improved MPEG-4 compression technology as well as copy protection, which both CD-i and Video CD lacked. But in the interests of avoiding a format war, the MMCD never came to market, with Philips and Sony ultimately agreeing to throw their support, and lend some of their software elements, to the DVD, developed by Warner Bros. and Toshiba.

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Divx: Disposable Disc Gets Deposed

What the Los Angeles Times at the time called “DVD’s disposable cousin” launched in September 1997, just six months after DVD’s U.S. launch, by a partnership consisting of the Circuit City retail chain and entertainment law firm Ziffren, Brittenham, Branca & Fischer.

The brainchild of Circuit City CEO Rick Sharp, Divx was short for “Digital Video Express.” The aim was to perpetuate the rental model, which DVD and its low purchase price was seeking to supplant with a consumer sales model. Divx discs sold for about $4.50 and could be viewed an unlimited number of times during a 48-hour period, after which they could be discarded. Divx’s most vocal studio champion was 20th Century Fox chief Bill Mechanic, who believed the studios could generate more money with it than with the outright sale of a $20 DVD movie.

The first Divx discs hit stores in September 1998. Fox, DreamWorks and Paramount were the only studios to go exclusive with the “use it and toss it” disc, although by the end of the year all three were also issuing films on DVD as that format began to catch on, big, with consumers. After the 1998 holiday season saw DVD sales soar, Divx’s fate was sealed — despite Sharp’s insistence during a January 1999 CES interview that “the reports of our death were greatly exaggerated. … In a short period of time, consumers have quickly grasped the fundamental concept of Divx, its benefits and the value of those benefits to them. … Both Circuit City and Divx are encouraged by the results, and we look forward to a very successful 1999.”

Just six months later, in June 1999, Circuit City officially pulled the plug on Divx. A year later Sharp lost his job.

What killed Divx? Circuit City competitors refused to stock it. Big rental chains such as Blockbuster and Hollywood Video saw Divx as an assault on their business and likewise refused to carry it. But, most importantly, consumers weren’t buying it, as they were still enamored with DVD’s promise of being able to buy new movies fresh off their theatrical runs for around $20 and keep them forever.

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Digital VHS: The Videocassette’s Last Stand

Just as RCA SelectaVision was introduced — at the same time consumers were told to ditch that other 12-inch analog format, the vinyl LP — Digital VHS launched in 1998, less than a year after DVD, whose very mission was to replace the VHS videocassette.

Digital VHS was developed by JVC in collaboration with Philips, Matsushita and Hitachi. It was the VHS videocassette’s last stand, and it couldn’t have come at a worse time. The only studio that actively lobbied for Digital VHS was 20th Century Fox, whose studio chief at the time, Bill Mechanic, was looking for any obstacles he could find to throw in the way of DVD, allegedly due to concerns over piracy.

Digital VHS’s supposed trump card was that content could be delivered in high-definition, unlike DVD. But with HDTV sales only accounting for 1.5% of all TVs sold in 1998, it really didn’t matter. Widespread studio support did not happen, with only DreamWorks, Artisan (now part of Lionsgate) and Universal Pictures joining Fox in releasing select movies on the digital cassette format. But as DVD sales soared, Digital VHS was soon forgotten, with 2004’s I, Robot the final film released on the doomed format.

As Red Shark News observed in a September 2021 article, Digital VHS “had the distinction of being the only format to provide high-definition programming before the arrival of Blu-ray and HD DVD. It was also one of the shortest-lived physical-media formats, ill-served by a combination of confused marketing, competing and incompatible equipment, limited programming and a market starved of HDTVs.”

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Universal Media Disc: Game Over

Buoyed by the success of its PlayStation video game console, Sony in 2005 unveiled a portable variant called the PlayStation Portable, or PSP, a handheld gaming and multimedia device. Games were delivered on a tiny optical disc — encased in a thin, flat cartridge — called the Universal Media Disc (UMD).

To give the format a little added value, Sony began issuing movies on UMD and soon enlisted most of the other major studios. Within five months of the format’s March 2005 launch, nearly 250 UMD movies were available for sale at Walmart and other big retailers.

But a year later, it was pretty much game over. Sales had risen, plateaued, and then dropped. Problems surfaced with the plastic case cracking, making the disc unreadable. Walmart and other retailers scaled back or eliminated their UMD software sections. Disney and 20th Century Fox cut back their UMD release slates, while Paramount and Universal stopped releasing movies on UMD entirely. One high-ranking Universal executive told Home Media Magazine at the time, “It’s awful. Sales are near zilch.” Another studio president maintained, “No one’s watching movies on PSP. It’s a game player, period.”

Sony tried one more Hail Mary — TV connectivity — before it, too, stopped releasing movies on UMD in 2010. The PSP remained on the market until 2014, when it was replaced by the PlayStation Vita.

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HD DVD: Red vs. Blue

By the early 2000s, DVD sales growth had slowed and high-definition TVs were selling fast. And thus began the quest for a next-generation, high-definition successor disc.

Once again, there were two camps. One consortium was led by Sony and employed blue-laser technology, with the promise of six times the capacity of a standard DVD. Warner and Toshiba, meanwhile, were busy developing an advanced format that used red-laser technology, just like DVD, only on a dual-layer disc with three times the capacity.

Warner and Toshiba wanted to get a product into the market as quickly as possible, to take advantage of growing HDTV sales. What they called HD DVD could use existing manufacturing processes and facilities. The Sony-led group’s Blu-ray Disc, on the other hand, was a completely new product hailed by backers as a “format of the future” that in addition to twice the capacity of HD DVD also could accommodate expanded interactivity and associated broadband services.

This time, neither side would budge and both formats hit the market in mid-2006. Skeptics hinted that it all came down to money: Warner and Toshiba wanted to maximize and extend the value of their DVD patents, while Sony, which had capitulated to Warner and Toshiba in the initial development of the DVD, didn’t want to be on the losing end again.

As Ben Feingold, the former president of Sony’s home video operation, told Media Play News earlier this year, “They were fighting over patents, royalties and pride.”

In late 2006, Sony put a Blu-ray Disc drive in its hot new PlayStation 3 video game console, giving that format a decided advantage. And yet the format war dragged on for more than a year, with several studios switching sides, or supporting both formats, after receiving “incentive payments” from one side or the other.

A big push by Disney accelerated Blu-ray sales, as did Blockbuster’s June 2007 decision to give HD DVD the boot. In January 2008, Walmart and Netflix — which at the time was still primarily a disc-by-mail rental service — announced that they, too, would carry only Blu-ray. And when Warner Bros. abandoned HD DVD as well a short time later, it was only a few more weeks before Toshiba threw in the proverbial towel and HD DVD was done.

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Total Hi Def Disc: Born of Frustration

The New York Times once observed that the Red Sox’s dismal 1965 season, in which the team lost 100 games, was “born of frustration and futility.”

The same can be said of Warner Home Video’s brief attempt at appeasement in early 2007 with the much-maligned Total Hi Def Disc, commonly referred to as the “flipper” disc.

In the fall of 2006, Warner Bros. Home Entertainment Group chief Kevin Tsujihara, like every one of his peers, was frustrated that the launch that summer of a high-definition successor to DVD had gone off with a whimper rather than the hoped-for bang.

The reason: a bruising format war between two rival next-generation disc proponents that left consumers confused and reluctant to buy either one.

As studios vacillated between supporting HD DVD, Blu-ray Disc, or both, a lightbulb went off in Tsujihara’s head that flickered with what he must have thought was the wisdom of Solomon. Only instead of threatening to split a baby in two, he split a disc in half, with HD DVD on one side and Blu-ray Disc on the other. The Total Hi Def Disc was unveiled at the January 2007 CES, with the promise that consumers no longer had to choose between HD DVD or Blu-ray Disc. With the flipper, they got both, at no extra charge.

The press was skeptical. As the Hugh’s News website observed, “Flipper discs are a nuisance. … They have next to no labeling area, making it difficult to identify their contents let alone indicate which side faces up. … And anyone who has handled a flipper disc knows how difficult it is to keep it in good condition. Plenty of dust, debris, scratches and greasy fingerprints are inevitable, and all play havoc with reliable reading. … Flippers also face brutal cost realities. … Publishers will be condemned to perpetually pay double patent royalties (for video and audio codecs, content protection, applications, physical design, manufacturing processes, etc.) and incur the price of authoring and testing two formats, not to mention the increased manufacturing outlay. By its very nature, THD is intrinsically tricky to produce, and with far lower yields resulting in greater expense — all in a penny-pinching business reliant upon long-term cost reductions.”

Not a single other studio chimed in, although several kept switching sides, often after receiving hefty “incentive” payments. A year after the flipper was introduced, Warner announced it would henceforth exclusively support Blu-ray Disc, putting an end to the flipper. Six weeks after the Warner announcement Toshiba announced that HD DVD was officially dead.

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3D Blu-ray: A Perfect Storm

After Blu-ray Disc’s 2008 triumph over HD DVD ended a nearly two-year format war, backers of Blu-ray Disc wanted to really show off the format’s capabilities. The industry saw the introduction of BD-Live, which allowed users to connect their disc machines to the internet for new, updated trailers and various interactive extras. Disney even released a Blu-ray Disc of Sleeping Beauty in which the sky behind the castle on the main menu page would change in accordance with the local weather.

But the grandest scheme, and the biggest flop, was 3D Blu-ray, which sought to capitalize on a fad then sweeping cinemas: a high-tech throwback to the 3D craze of the 1950s, triggered by the 2009 film Avatar and perhaps most effectively deployed that same year in The Final Destination, where objects seemed to fly out of the screen and hit you in the head.

3D Blu-ray was doomed from the get-go, as theater owners soon realized that not every movie — only a scant few, really — lent themselves to 3D, particularly if moviegoers had to wear a pair of glasses the entire time. But consumer entertainment companies plunged into 3D Blu-ray headfirst, developing expensive TVs, expensive players and a wide assortment of 3D glasses that for the most part were incompatible with those of other CE manufacturers.

Ultimately, the response from consumers was a resounding “No, thank you.” Keep in mind this was 2009, a time when the country was still in the midst of the Great Recession. Spending thousands of dollars on new TVs, players and even glasses — some of which sold for upwards of $100 a pair — was simply not in the average household budget. On top of that, millions of consumers had just bought new HDTVs that met new broadcast requirements.

Adding to what was already a perfect storm of obstacles was rampant consumer confusion. I remember getting a new 3D Blu-ray TV and player from Panasonic, but the salesman never could figure out which glasses were right for my particular model. I had a stack of 3D Blu-ray Discs in my bedroom, and was never able to watch a single one of them.

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UltraViolet: Rumblings in the Cloud

Launched in 2011, UltraViolet was a cloud-based “locker” that allowed consumers to buy a movie or TV show on either a DVD or Blu-ray Disc or through a digital retailer, access it from the cloud by entering in a code or proof of purchase, and then play that movie on whichever device they wanted to.

UltraViolet’s launch was supported by a consortium of more than 60 content and hardware companies known as the Digital Entertainment Content Ecosystem (DECE).

In a pre-launch interview with Home Media Magazine, DECE head Mitch Singer talked up UltraViolet’s “buy once, play anywhere” philosophy, telling the trade, “UltraViolet will mean consumer choice, confidence and freedom. When consumers see the UltraViolet logo on a DVD or Blu-ray Disc it means that they will be able to watch that movie not only from their Blu-ray player, but also on other devices, such as mobile phones or other Web-enabled devices with apps from UltraViolet partners. Consumers will know exactly how, when and where they’ll be able to access and play their movies and TV shows. UltraViolet will give consumers a flexible, consistent and predictable entertainment experience.”

The first UltraViolet-enabled title was Horrible Bosses, released by Warner Bros. on Oct. 11, 2011. From the start, however, UltraViolet was hampered by the fact that while five of the six major studios supported it, the one that didn’t was Disney — and Disney was in the process of developing its own cloud-based locker, Disney Movies Anywhere, which launched in 2014. By then, UltraViolet had grown to more than 20 million accounts.

But just as the service grew, so did complaints — mostly about ease of use, particularly the consumer interface. Questions also arose about how many account holders were actually using the service, as well as further growth prospects, given the soaring popularity of subscription streaming. The death knell was sounded in October 2017, when Disney rebranded its proprietary service to Movies Anywhere and invited other studios to join in. All but Paramount, Lionsgate and MGM did, and in July 2019 UltraViolet was officially shut down.