Several years ago there were two systems for viewing movies at home: Sony's BetaMax machines and VCR machines that played VHS tapes. Despite the higher quality of BetaMax video, VHS became the dominant format. Once VHS tapes were the dominant format, BetaMax virtually disappeared from consumer markets. Why?

Question

Quizplus · Accepted Answer

Consumer preference for VHS over BetaMax was likely driven by the network effect, where the value of a product increases as more people use it. As VHS became more popular, more people owned VHS machines, making it easier to share and borrow tapes with others. This created a self-reinforcing cycle that favored VHS over BetaMax, despite the latter's technical superiority. As a result, BetaMax struggled to gain traction in the market, leading to its eventual disappearance.

Several Years Ago There Were Two Systems for Viewing Movies