About 10 years ago, I was walking down a street in midtown Manhattan with an old friend that I hadn't seen in several years -- both of us worked in movies, me for a film company and he as an independent writer/director; as we walked, we passed a man on the street selling videocassettes of old movies by the Three Stooges, Popeye cartoons from the 1930s, and other similar fare for $5 each. We stopped, looked at each other, and realized that the movie business, and collecting and viewing movies, would never be the same. Had the man been selling those movies in their most economical film format, they would've been twice as expensive and half as convenient and would have interested -- at best -- one in a hundred passersby. Instead, he was selling them at the rate of one or two a minute and was trying to put more titles out on his table. That day, I began pushing into the home-video side of the business because I realized where the future lay in the small company I worked for. In simplest terms, home video is the single biggest development in movies since synchronized sound -- it may even be bigger, in the sense that it permanently changed the way that movies are packaged, sold, and watched, where sound only added a key element to an already established entertainment medium. Its development is a fascinating story in itself of industry ambitions and ignorance, lost opportunities and unexpected successes.

The origins of home video lay in the birth of television. Although television has long been thought of as a post-World War II development, it really dates from the 1920s as an invention and the 1930s as a broadcast medium -- most of the film companies actually had departments, albeit small ones, devoted to keeping up with television technology during World War II. After the war, when broadcasting resumed on a commercial basis, the number of licenses granted by the FCC was highly restricted until 1951, when the moratorium was lifted and the medium exploded -- the film companies, already fearful of the new competitor, tried to outdo television with innovations such as widescreen (CinemaScope, VistaVision, Panavision, Cinerama etc.) and stereo sound, which made the movies seem bigger if not necessarily better, and television continued growing. By 1955, the major studios had all begun licensing large parts of their libraries, mostly black-and-white and generally pre-1950 material, to television or, in the case of Warner Bros. and Paramount, sold them outright to other companies (United Artists, Universal respectively) for television distribution. By 1960, as the television networks began instituting nationwide movie showings, even relatively recent, big-budget films such as How To Marry A Millionaire (1953) began turning up on the home screen.

This was all well and good -- people were happy to get the movies for "free" (paid for by the sponsors), and the studios were begrudgingly happy about the added revenue. The only problem lay with the television stations and the networks who were showing the movies -- they loved having the movies to show but had little use for the physical film itself. Throughout most of history since the teens, the standard dimension for motion picture film was 35mm, which was fine for theaters. But 35mm film was immensely bulky, difficult to store, and even more inconvenient to show, especially at television stations whose main business was really selling advertising. So for television presentations, 16mm film became the standard format for most movies at the majority of stations. But even 16mm film was inconvenient -- the whole process of running actual prints was awkward at best. At the time, all of television was either sent out live or preserved on film. The only way to preserve live broadcasts was on film, through a process called kinescoping -- a special camera literally made a film of a live broadcast off of a television monitor. The resulting prints were then duplicated and distributed to other network-affiliated stations that hadn't picked up the original telecast and became the only means for preserving the event.

Then, in the early 1960s, videotape, which had been introduced experimentally in the late 1950s, gradually took over as the standard means for showing almost any program on television. Even when 16mm prints were sent out, it became common practice to transfer them to videotape, which had fewer potential glitches in its use and could be reused. Two-inch videotape, every bit as bulky as 35mm film -- but which could be reused -- was standard for much of the 1960s. In the 1970s, one-inch and 3/4-inch tape -- both taking up far less space than 2-inch tape -- became standard, and the television stations and networks were satisfied with the technology.

It was during this same period, the early 1970s that the technology for the standard VCR, using 1/2-inch tape, was perfected. At the time, however, no American company believed that there was any market for videotape in the home. They had good reason to believe this -- several attempts at launching home video systems had been made early in the 1970s, and one, Cartrivision, had gotten into a few thousand households, but no new technology can survive on just a few thousand purchasers. There were 8mm, super-8 and16mm collectors who viewed films at home, but there were precious few of them. Three-quarter inch U-Matic tape had been successful, but only among professionals and institutions such as schools, libraries, and businesses -- ordinary, casual home viewers showed no interest in it.

The industry never calculated, however, just how much Americans valued their entertainment or their time. They also failed to grasp that the failure of Cartrivision and the low number of 16mm collectors was due to the inconvenience of both media and that the failure of U-Matic tape to find a home-use market lay with similar difficulties concerning cost and space. These were all problems that 1/2-inch videotape solved.

In the mid-1970s, the Japanese company Sony made a different calculation and introduced the Betamax videotape recorder. Initially costing well over $1000, these machines were beautiful if bulky devices that could only fit an hour's worth of programming on tapes that cost $15 or more a piece. But for the first time ever they allowed viewers to take control of their television screens, freed them from the scheduling whims of television stations, and gave them a chance to preserve television and movies that they enjoyed. Ultimately, the price came down, and sales in Japan and the United States began to rise dramatically through the late 1970s. Sony had made a good bet on the needs of the public and its willingness to spend money to meet those needs, but it had gambled with the wrong product -- a good product, but the wrong product, especially in America. The Betamax machine was an excellent device in all of its forms, and the Beta tape system delivered an image that was a bargain for its price at the time. But Beta tape had a major limitation in its running time -- Sony tried to extend this by introducing slower speeds, Beta-2 and Beta-3, that extended the running time of videocassettes to two hours or more, but by then a rival company, JVC (Japanese Victor Corporation), had arrived in the market with a completely incompatible tape format, VHS (for Video Home System). VHS machines cost about the same or slightly less than Beta machines and delivered an image somewhat less sharp than Beta's, but real attraction for the format lay in the VHS cassettes, which cost more than Beta tapes but had running times of up to six hours.

Within two years of its introduction, VHS was out-selling Beta, and by the end of the 1970s VHS had a slight majority of the households in the United States. At that time, the nature of those households were changing -- where the VCR had been bought mostly by upper- and upper-middle-class households in the 1970s, by the beginning of the 1980s, as prices dropped below the $500 level, middle-class and lower-middle-class Americans had begun buying the machines. Their interest was spurred, in turn, by the newest phenomenon in American popular culture -- the video rental store. Thousands of would-be businessmen had opened video-sales stores in the late 1970s and early 1980s, hoping to get in on the money to be made from new VCR owners buying videocassettes.

Until this time, theaters and television stations only leased films temporarily -- actually selling copies of films, even on videocassette, was unprecedented and required a major change in the mindset of the studio managements. Those Hollywood studios, fearing that sales of copies of their films would mean the loss of control, and not knowing how big the market might be, had released or licensed the few films available on video at prices of $60 or more, and sales were very few in number. As a result, many video stores, faced with bankruptcy and stocks of unsalable merchandise, then discovered that it was possible to recoup their investments and create steady cash flow by renting the tapes they couldn't sell. The studios and distributors blanched at first, concerned that the tapes they'd sold to stores for resale would now begin generating cash indefinitely to those stores, with no reorders in sight, but there was nothing they could do about it -- the United States Copyright Law has what is known as the "first-sale doctrine," which essentially means that the purchaser of a copyrighted product such as a videocassette is free to sell or rent it as they see fit; the doctrine was only modified to outlaw record rentals, because the music industry genuinely feared the results of such transactions, but by the time anyone in the movie business was willing to even look at approaching Congress about a change for video material, it was too late -- millions of Americans were renting tapes nightly, and many thousands of retailers' businesses were based on those transactions, with most of those rentals for VHS tapes. In a chicken-and-egg-type process, the growing popularity of VHS machines led most dealers to stock greater numbers and variety of VHS tapes, which in turn made VHS machines more attractive to potential purchasers. In the end, by 1985 most video stores were forced to drop their Beta libraries, which simply weren't generating as much money and were taking space and capital away from VHS inventory.

During this same era, two rival formats were launched and failed. RCA attempted to market a videodisc system called Selecta-Vision, while MCA and Magnavox put their money on a system called Disco-Vision. The two disc formats were completely incompatible, Selecta-Vision being a needle-based system that was far cheaper to produce and cost far less to the consumer, while Disco-Vision was a laser-based system that generated a far-sharper image. Both formats had major technical problems, and by the early 1980s their respective manufacturers had pulled the plug on both.

Disco-Vision, however, was taken over by Pioneer under the guise of LaserVision during the early 1980s and successfully relaunched. In the 15 years since, laserdiscs have found an audience of upwards of 800,000 in the United States, with some individual releases (such as Terminator 2) selling upwards of 200,000 copies. Moreover, its image and sound quality -- far higher than VHS tape -- have made it the format of choice for serious collectors, film buffs, and film professionals, including such celebrated directors as Martin Scorsese and George Lucas. Indeed, Lucas and his THX system -- which was initially devised to improved theater sound -- have helped carry laserdiscs to a level of sound and visual reproduction that was undreamt of even a decade ago. Additionally, firms such as Voyager Company, with its Criterion Collection, have carried laserdisc technology to the outer limits of its capabilities in terms of content, range, depth, and interactivity.

Meanwhile, VHS overwhelmed Beta by the end of the 1980s, and not even such visual enhancements as Beta-ED (extended definition) and Super-Beta could save the Sony-sponsored format. Although some distributors continued to issues limited quantities of Beta copies of new releases, and a handful of mail-order distributors continue even into the 1990s to buy and sell older Beta tapes (servicing a die-hard group of Beta users possibly numbering in the hundreds of thousands), the format war was essentially over by 1986. While VHS was winning the war, one new format was introduced that found limited acceptance among home-video users -- 8mm videotape proved especially popular among users of video cameras, for which its small cassettes were ideally suited.

The VCR boom of the early 1980s continued into the middle of the decade, as old machines wore out and families invested in second or even third machines for their homes. But at the end of the decade, the electronics industry was again entering a period of doldrums, partly due to the overall satisfaction that people felt with their VCRs (and to a great degree their CD players, digital audio having caught on en masse immediately after the crest of the VCR boom in 1984/85). The hardware makers began searching for a new format that would appeal to viewers in the same way -- the Netherlands-based corporation Philips cast its lot with CD-I, a format vaguely similar to the more advance computer-driven CD-ROM, with limited success. In 1997 the Digital Video Disc was introduced and seems to be the format of the next moment. Though the popularity of DVDs seems unquestionable, there are still upwards of 80 million VCRs in place in the United States, and the quality of the masters used in making videocassettes keeps improving as well, driven in part by the laserdisc format, whose users value quality above all else. So, until the prohibitive cost of DVD players is reduced, most home-movie consumers will stick to their VCRs.