But Betamax was also more expensive than VHS. And while Sony tried to keep the fruits of the format to itself, VHS was farmed out to other electronics manufacturers. As John Nathan notes in his book Sony, by 1980, "Betamax was being driven from the home video market."
Over the years, Sony met with other format failures: the mini-disc in 1991 and the memory stick in 1998. Neither was as costly as the Betamax disaster, but both were born of the same mania for proprietary formats.
Sony internalized these losses, but viewed them as the results of tactical, not strategic, defects. So the company looked for ways to bolster new formats. As the DVD revolution was dawning in the late 1980s, Sony spent $3.4 billion to buy the movie studio Columbia-TriStar Pictures. Sony believed its hardware simply needed software to go with it.
Sony wisely avoided the fight for a proprietary DVD format, instead partnering with Toshiba and Philips (the DVD already had one competitor, DivX). But always mindful of the past, Sony looked to establish Blu-ray as the next-generation format, putting it on a collision course with HD-DVD. To gird itself for this war, the company bought another movie studio, MGM, in 2004 for $5 billion and then decided to put Blu-ray drives into the PlayStation 3.
It's a strange way of thinking. Obsessed with owning proprietary formats, Sony keeps picking fights. It keeps losing. And yet it keeps coming back for more, convinced that all it needs to do is push a bigger stack
of chips to the center of the table. If Blu-ray fails, it will be the biggest home-electronics failure since Betamax. If it drags PlayStation 3 down with it, it will be one of the biggest corporate blunders of our time.
The people who run Sony aren't stupid; quite the opposite. But every outlook carries its own internal logic, which can lead smart people in unsmart directions.
History teaches some lessons about that, too.
Jonathan V. Last is online editor of The Weekly Standard and a weekly op-ed contributor to the Philadelphia Inquirer. This essay originally appeared in the June 4, 2006 edition of the Philadelphia Inquirer.
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