From Betamax to Blockbuster: Video Stores and the Invention of Movies on Video

Joshua M. Greenberg, From Betamax to Blockbuster: Video Stores and the Invention of Movies on Video. Cambridge, MA: MIT Press, 2016.

Summary: Although the VCR was originally positioned as a device for time-shifting TV, its dominant use quickly became the viewing of pre-recorded content. The book tells the story of that evolution, and how it affected both the medium and the content: how the mismatches between the technology of the VCR/TV vs. theaters affected movie viewing, the social and commercial constructs such as video rental stores that sprang up around the experience, and the cultural shift in the perception of what, exactly, a “movie” was and what the experience of “watching a movie” came to mean. Video rental stores, which provided the intermediary that brought these mismatched perspectives together, did such a good job that they ultimately rendered themselves obsolete.

Technological prehistory. In 1969 Sony invented the U-Matic, the first cassette-based color videotape recorder and ancestor of the Betamax, which could record up to an hour of video in the NTSC (American analog TV) format. Up to then, reel-to-reels with low-density tape had been used for “kinescoping” a TV broadcast: a show would be shot on the East Coast, a kinescope pointed at a monitor to record the playback, and then the film would be developed and rebroadcast around the country. Selling the U-matic was hard since there was no “software”; initial attempts focused on getting educational companies to convert their materials to the format for in-school use; in practice, adult video arcades probably did more to launch the industry, replacing “film loops” with cassettes.

Sony positioned the 1975 Betamax (price: $1,295) as a device for “time-shifting TV”, hence underestimated consumer demand for blank cassettes. In addition, Betamax tapes could only record 1 hour of video. For the first 2 years of Betamax’s existence, the only prerecorded tapes users could legally buy were public domain films or pornography. Japanese competitor JVC (Japan Victor Corporation) came up with its own incompatible format called VHS, which could record two full hours albeit with slightly lower quality than Betamax. JVC also triggered a price war by licensing the rights to manufacture VHS equipment to any manufacturer, whereas Sony was the exclusive manufacturer of Betamax equipment. One VHS manufacturer, Matsushita (Panasonic), struck a deal with RCA to manufacture a unit that would allow 4 hours of recording on VHS tape at substantially lower quality, allowing sports events to be captured in their entirety. Sony (and most experts) insisted that Betamax’s recording quality was superior, but that seemed less important to consumers than longer recording time and lower-priced equipment. Sony eventually responded to these technical and business challenges with improvements to Betamax, but by then VHS had basically won the format war with consumers.

Late 1970s: early adopters lead to the birth of a consumer-facing business. Early videophiles (usually white males, 21-39) would record and archive entire TV miniseries (or better, movies) and even edit out commercials to make the experience closer to viewing a movie. They would copy and trade tapes, by mail or in person at informal gatherings; they formed nationwide networks supported by amateur magazines, phone numbers, and mailinglists used to distribute photocopies of TV Guide listings from other regions.

A pilot test of a third format called Cartrivision, which could hold 2 hours of video and was used to distribute “classic” movies, failed due to poor implementation: technical problems made the tapes disintegrate prematurely and damage the players; the tapes could not be rewound except by a dealer, to ensure that renting only allowed a single viewing, which angered users (a necessary concession to movie studios, who refused to license movies unless they could closely control the viewing experience); and the tapes were delivered by mail, taking days to arrive. Indeed, when Sony released the Betamax in 1975, chairman Akio Morita had tried to strike a deal with Paramount to distribute movies, but again failed because the studio feared losing control of the user’s viewing experience. In essence, attempts to create a movie-distribution market were hobbled by tying the studio-imposed constraints of distribution to the technology used. VHS sidestepped most of that and became the dominant format, so it was effectively poised to become the vehicle for distributing movies to consumers; but the studios were still resistant, seeing it as a threat that would cannibalize their existing business model of distributing movies to theaters.

Nonetheless, some entrepreneurs saw a market for media in the home, and started making inroads:

Noel Gimbel, owner of the Chicago electronics store Sound Unlimited, thought he could stimulate VCR sales by selling public-domain movies on tapes. Later, he would convince Paramount that that studio’s ill-fated exclusive with Fotomat for distributing movies was failing, as video store owners were simply distributing bootlegged copies.
Don Rosenberg, who worked for a record distributor, had the idea of going door-to-door convincing music retailers to expand into video, which was tricky because the distribution model for video was based on the model for the appliances with which blank tapes were sold—retailers paid for stock and sold it. In contrast, music was like books—dealers got paid only when customers bought something, and had 90 days to return unsold goods.
Entrepreneur Andre Blay is credited with kickstarting the media-in-the-home industry by making successful deals with 20th Century Fox to establish a rental membership plan for movies. His company Magnetic Video did video duplication and distribution for studios, and he had seen that studios licensed 20-minute “digests” of movies for distribution on 8mm tape; why couldn’t they make even more by licensing full-length movies? Fox ultimately acquired Magnetic Video as Fox Home Entertainment, and other studios followed suit and set up their own Home Entertainment divisions. This forced the hand of distributors and retailers in the music industry, and the home entertainment retail industry became a hybrid of the previous music model and the new video rental model.
Because of the questionable moral standing of pornographic video, the societal stigma of going into a porno theater, and in some cases its ties to organized crime, pornographers were more willing to embrace risky distribution strategies. Porno was instrumental in launching the home media industry. (Porno theaters showing bootlegged tapes were paid a visit by organized crime.)

Slowly the material nature of the cassette began to give way to the abstract nature of “buying entertainment”, as video stores started stocking shelves with empty boxes or box covers while keeping the tapes stored elsewhere (usually for security reasons), and the VCR itself, originally intended as the focus of consumer attention for time-shifting TV, became an incidental artifact used to play back movies. Early video stores were often staffed by movie buffs with no retail experience who just enjoyed being around movies and offering personalized advice to customers, and customers offering advice to each other while browsing the shelves; “going to the video store” became a social ritual as much as watching the movie itself. Local stores hence became social spaces “like bars without alcohol” (consumption junctions, in the language of media theory).

The maturation of the rental industry: franchisization and disintermediation. By the early 1980s, the nature of the rental industry changed as video rental took off. Early video-rental stores took advantage of the “first purchase” rule that applies to books, wherein the original purchaser can do whatever they want with their copy of a video, including rent it an unlimited number of times with no royalty payments to the studio; in retaliation studios began licensing “rental-only” copies at much higher cost, and uneasy truces were eventually reached as a result of retailers and distributors forming advocacy organizations that could negotiate licensing and royalty terms with the studios. Still, with rapidly growing consumer demand for renting movies, self-styled entrepreneurs with no retail experience wanted to open video stores; some successful video chain owners even had a side business providing consulting or “turnkey setup” of your own new video-rental business, most of which were no longer staffed by movie buffs as in the early days. The transformation was complete when entrepreneur Wayne Huizenga saw the first Blockbuster Video store in Florida: clean and bright, family-friendly (no adult-video room in back), prominently displayed children’s programming section, and the accoutrements of the movies (popcorn, candy, etc.)—something a few independents had started to do, but became a formula with Blockbuster. The chain reached such efficiency that it could load an 18-wheeler with everything necessary (furniture, tapes, electronic equipment) to turn an empty storefront into an operating retail location within 24 hours.

What is a movie? The spread of VCRs challenged the Platonic ideal of “the movie”. Previously the movie as artifact had been wedded to both the technology of the theater (albeit widely varying) and its cultural setting. TV had a different commercial milieu (embedded advertising; FCC constraints and scheduling constraints that led to often heavy “editing for TV”), a different cultural one (sitting in the dark with strangers vs. sitting in living room with family/friends; pausing to go to the bathrrom), and a different technological one (1.33 aspect ratio vs. 2.35 widescreen; mono or stereo vs. surround audio). The introduction of “letterbox” VHS tapes was bumpy because for some consumers watching movies on TV was framed as watching TV, which was supposed to fill the screen, whereas for others it was framed as watching movies, in which case it was a more “movielike” experience. (Ironically, the 1.33 aspect ratio of TVs was chosen to imitate the early movie industry; 2.35 was adopted later when the movie industry perceived itself as under threat from TV and in need of differentiation.) Similarly colorization: some actors, notably Cary Grant, evaluated it in terms of its matching the physical sets on which filming had occurred, whereas some directors and many critics blasted it because it distorted their only experience of the movie, which had been watching it in B&W.

Finally, the lack of social stigma around “being unable to program my VCR” (unlike, say, admitting you were unable to operate a phone) suggested that the act of programming it (i.e. time-shifting TV programs) was no longer central to the VCR’s technological frame.

Conclusion. Video stores were the “mediators” between two cultures in many different ways. Studios weren’t used to distributing movies on tape, or comfortable with a rental market; but that’s what consumers wanted. The commercial models around distribution and retail didn’t match consumers’ expectations. TV technology didn’t match theater technology as a way to view a movie, but along with consumers’ evolving perception of what “watching a movie” meant, at once embracing “theater accoutrements” like candy and popcorn in video stores and confounding them by changing the social interactions around movie-watching, video stores were there to mediate the transition and bring consumers and producers together. Ironically, they were so successful at doing so that they have been disintermediated:

Technologically, VCRs gave way to DVDs. Although DVDs provide higher picture quality, they did not initially enable the amateur market (direct-to-video indie films, home movies, etc.) in the ways the VCR did, which was critical to the cultural rise of video stores. (Today indie filmmakers can shoot direct to digital and distribute via YouTube, but that wasn’t true when DVDs arrived in the early 2000s, and was barely true in 2006 when DVD movie sales first outsold VHS movie sales.) In addition, DVDs “demystify” movies by bundling making-of, interviews, etc. with the feature itself, something completely alien to the theater experience, suggesting that the transformation of consumers’ perception of “watching a movie” is complete.
Independent video stores gave way to chains (Blockbuster, Hollywood Video), which themselves went out of business as direct-from-distributor services like Netflix arose.

The overall lesson may be: without intermediation, new cultural phenomena such as the video-movie revolution could not happen; but once underway, the intermediaries themselves become redundant. (I wonder if a similar argument could be made for retail computer sales—independent stores gave way to national chains like Computerland, then to computers being sold directly in office-supply stores like Office Depot as the computer became mainstream, then eliminated in favor of direct-from-distributor online ordering.)