Three's a Crowd in Videodiscs

By Alexander Taylor

Betting millions on something new for the family TV

The television set has long since evolved from a rare electronic marvel into a household appliance that is as ubiquitous as the kitchen stove. Now, a host of video products is appearing on the market that can transform the home TV from a passive machine capable of receiving broadcast programs into a versatile instrument permitting viewers to watch whatever programs they want, when they want. The latest entry in this market is videodiscs, machines that reproduce recorded programs or movies from a record-like platter onto the screen of any home television set. Next week, RCA Corp. will unleash an avalanche of advertising to launch its version, called Selecta Vision. RCA has spent more than $150 million during the past 15 years to develop Selecta Vision, and it will invest another $20 million more before the end of the year to promote it.

RCA, however, faces stiff competition in the new market. One rival videodisc system has been on the market since December 1978, and a third one is due out around Christmas. Each product is backed by one or more major electronics companies, and the systems are incompatible: the discs of one will not play on any system but its own. Moreover, all the videodiscs will be battling for scarce consumer dollars against an ever increasing array of home-entertainment products that ranges from giant-screen home projection devices and videotape recorders to television games and home computers.

The most sophisticated videodisc players currently available are Magnavision, a joint venture of the Dutch electronics firm Philips and the American entertainment company MCA, and LaserDisc, a product of the Japanese electronics firm Pioneer. Both use playback machines that read pictures and sound from a metallic record via a laser beam that never physically touches the platter. With LaserDisc the viewer can select which of the up to 54,000 frames on the record he wants to see by pushing buttons on a keyboard; each frame has its own number. For instance, on a disc that contains images of art masterpieces, a viewer could jump from a picture of Rembrandt's Self-Portrait to Degas's Ballet Scene in a matter of seconds. Sound for the program can also be reproduced in stereo.

Industry sources say the laser system got off to a bumpy start. By the end of 1980, only about 35,000 of the expensive machines (cost: up to $779) had been sold. Although both of them are now nationally advertised, they were sparingly promoted at first. Only a limited number of programs had been available, and early discs sometimes stuck while being played.

RCA's SelectaVision is a simpler system that works more like a conventional record player. The viewer slips the disc, including the dust cover, into the front of the machine and then pulls the cover back out before the feature starts. A cartridge with a diamond stylus tracks 27,000 incredibly tiny grooves on the record to reproduce the picture. Unlike the laser system, the RCA device cannot find scenes at random or freeze a frame.

RCA believes that it has four advantages in selling its videodisc system: lower price, easier operation, a vast selection of programs and marketing strength. The less complicated SelectaVision machines will sell for $499.95, or nearly $300 less than laser systems. RCA will immediately offer 100 programs that range from the movie Rocky to demonstrations on baby care narrated by Dr. Benjamin Spock. Finally, SelectaVision will be sold in 5,000 stores under the RCA label, and a compatible system is being marketed by Zenith, Sears, Radio Shack and Hitachi under their own brand names.

Next fall a third videodisc system, VHD, will be introduced by Japan Victor Co., a subsidiary of the giant Matsushita Electric Industrial Co., and other firms. Although it uses a diamond stylus, like the RCA system, it will have the random access features and stereo sound capability similar to the laser systems. These machines will be priced somewhere between SelectaVision and the laser systems and sold in the U.S. under the Panasonic, JVC, Quasar and General Electric brand names.

Videodisc machines are marvelous instruments, but is there a market for them? Industry experts believe that videodiscs will initially be used primarily for old Hollywood movies. Says RCA Executive Vice President Herb Schlosser. "Motion pictures will make up at least 50% of the business at the beginning." Yet many observers wonder whether Americans will spend up to $30 to own their personal copy of a film that they will view only once or twice. Says Richard Ekstract, publisher of Video Review magazine: "You can watch Gone With the Wind or The Wizard of Oz more than two or three times. But for most of the stuff out there, it is not worth wasting your time."

Another unknown is how the videodiscs will fare in competition with videotape recorders. Machines like Sony's Betamax or Panasonic's OmniVision, which will record and replay movies or anything else shown on television, cost from $700 to $1,500. They were introduced in 1975 but only recently have begun to catch on. Some 2 million of them have now been sold, and sales last year jumped by 69%. Another 1.5 million are expected to be sold this year. Six-hour blank videotape cassettes, which can be used over and over again, cost only about $20, although tapes of recent movies are about $70. Says Wall Street Analyst Lee Isgur of Paine, Webber: "Probably 98% of the people who are exposed to videodisc and a videotape recorder for the first time will buy the tape recorder." Adds an industry watcher, Anthony Hoffman of the New York brokerage firm of A.G. Becker: "The question is not which videodisc system will win but whether the videodisc will sell at all."

The average American family now watches television for 6 1/2 hours a day, but industry analysts say that when all the new devices are attached to the TV set, people may keep them on from sunup to bedtime. Electronics firms have now entered a billion-dollar battle that will determine which machines those consumers will be using.

-By Alexander Taylor. Reported by Mary Cronin/New York and Joseph J. Kane/Los Angeles

With reporting by Mary Cronin, Joseph J. Kane

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