In 1912, Thomas Edison and Pathé began selling film projectors for home use, marking the first serious attempt to bring cinema into the living room. This venture was born from a simple yet ambitious idea: that ordinary people could own copies of films and watch them at their convenience. However, the business model was fundamentally flawed. Edison, who had started with phonographs, failed to differentiate between home viewing and home listening, leading to his exit from the home viewing business by 1914. Pathé remained active for a few more years but eventually withdrew during World War I. The high cost of making release prints, which was at least $1,000 as of 2005, made it impractical for most consumers to own films. Early projector owners rented films by mail directly from the manufacturers, but this model did not sustain itself. For most of the 20th century, the idea that ordinary consumers could own copies of films and watch them at their convenience in their own homes was beyond the grasp of reasonable expectations. Only a small community of dedicated hobbyists, willing to invest large amounts of money in projectors, screens, and film prints, could afford to enjoy home viewing. Kodak's invention of 16 mm film in 1924 and later 8 mm film provided some relief, but the technology remained expensive and difficult to use. The Super 8 film format, introduced in 1965, boosted the popularity of show-at-home films, but it was still limited to a niche audience. The dream of home video remained elusive until the mid-1970s, when videotape became the first truly practical home-video format.
The Birth of Home Video
The year 1976 marked a turning point in the history of home entertainment with the introduction of the Betamax and VHS home videocassette formats. These formats were far easier to use than the bulky reel-to-reel tape systems that had preceded them. Magnetic Video, established in 1968 as an audio and video duplication service, became the first company to distribute feature films from major film studios on home video. Andre Blay, the chief executive of Magnetic Video, wrote letters to all the major film studios offering to license the rights to their films. Near the end of 1977, Magnetic Video entered into a first-of-its-kind deal with 20th Century Fox. Magnetic Video agreed to pay Fox a royalty of $7.50 per unit sold and a guaranteed annual minimum payment of $500,000 in exchange for nonexclusive rights to 50 films, which had to be at least two years old and had already been broadcast on network television. Home video was born, initially, as a rental business. Film studios and video distributors assumed that the overwhelming majority of consumers would not want to buy prerecorded videocassettes, but would merely rent them. They felt that virtually all sales of videocassettes would be to video rental stores and set prices accordingly. In 1977, Magnetic Video originally priced its videocassettes at $50 to $70 each, a princely sum at a time when the average price of an American movie ticket was $2.23. When the American home video market suddenly took off like a rocket, Fox bought Magnetic Video in 1978 and turned the company into its home video division. The home video market grew rapidly along with the widespread acquisition of affordable videocassette recorders by the majority of households during the 1980s. By 1992, the percentage of television-owning households with a VCR was 75.6%.
During the 1980s, video rental stores became a popular way to watch home video. These physical retail businesses rented home videos such as movies and prerecorded TV shows, and sometimes sold other media, such as video game copies on disc. Typically, a rental shop conducted business with customers under conditions and terms agreed upon in a rental agreement or contract, which may be implied, explicit, or written. Many video rental stores also sold previously viewed movies and/or new unopened movies. In the 1980s, video rental stores rented films in both the VHS and Betamax formats, although most stores stopped using Betamax tapes when VHS won the format war late in the decade. The shift to home viewing radically changed revenue streams for film companies, because home renting provided an additional window of time in which a film could make money. In some cases, films that performed only modestly in their theater releases went on to sell significantly well in the rental market, such as cult films. Video rental stores became a cultural phenomenon, with chains like Blockbuster becoming household names. The success of these stores was driven by the convenience they offered to consumers, who could rent movies for a few dollars and watch them at their leisure. The video rental industry also fostered a sense of community, with store employees often becoming trusted advisors who could recommend the latest releases or hidden gems. However, the rise of video rental stores also led to concerns about copyright infringement and the potential for piracy, which would become a significant issue in the years to come.
The Children's Video Revolution
The ultimate accelerant for the rise of the sell-through home video market was the development of children's home video. The pre-1980s conventional wisdom that consumers had no interest in watching the same films again and again at home turned out to be entirely wrong with respect to children. Many harried parents discovered that it was a good investment to pay $20 to purchase a videocassette that could reliably keep their children riveted to the television screen for over an hour, and not just one time, but many, many times. The Walt Disney Company recognized that its flagship animation studio's family-friendly films were superbly positioned to conquer the home video market, and through its home video division, Buena Vista Home Entertainment, the company did just that during the 1980s and 1990s. This spectacular success catapulted the head of Disney's video division, Bill Mechanic, into executive stardom. In 1994, Mechanic left Disney to become head of Fox Filmed Entertainment. Another executive, Bob Chapek, would later ascend through the ranks of Disney's home video division to become chief executive officer of the entire company in 2020, and for that reason (before his sudden 2022 departure) was called the home entertainment industry's single biggest success story. The children's video revolution transformed the home video market from a niche rental business into a massive retail industry, with families eagerly purchasing their favorite movies to build their own libraries. This shift also led to the development of special-interest video production, which catered to niche audiences with content such as dog handling videos, back pain videos, and cooking videos.
The Decline of Videotape
In the early 2000s, VHS began to be displaced by DVD. The DVD format had several advantages over VHS. A DVD consists of a single disc, which is spun at high speed, while VHS videocassettes had several moving parts that were far more vulnerable to breaking down under heavy wear and tear. Each time a VHS cassette was played, the magnetic tape inside had to be pulled out and wrapped around the inclined drum head inside the player. While a VHS tape can be erased if it is exposed to a rapidly changing magnetic field of sufficient strength, DVDs and other optical discs are not affected by magnetic fields. The relative mechanical simplicity and durability of DVD compared to the fragility of VHS made DVDs a far better format from a rental store's perspective. Though DVDs do not have the problems of videocassettes, such as breakage of the tape or the cassette mechanism, they can still be damaged by scratches. Another advantage from the perspective of video rental stores is that DVDs are physically much smaller, so they take less space to store. DVDs also offer a number of advantages for the viewer: DVDs can support both standard 4:3 and widescreen 16:9 screen-aspect ratios, and can provide twice the video resolution of VHS. Skipping ahead to the end is much easier and faster with a DVD than with a VHS tape, which has to be rewound. DVDs can have interactive menus, multiple language tracks, audio commentaries, closed captioning, and subtitling. Moreover, a DVD can be played on a computer. Despite the mainstream dominance of DVD, VHS continued to be used, albeit less frequently, throughout the 2000s. The switch to DVD initially led to mass-selling of used VHS videocassettes, which were available at used-goods stores, typically for a much lower price than the equivalent film on a used DVD. In July 2016, the last known manufacturer of VCRs, Funai, announced that it was ceasing VCR production.
The Streaming Revolution
One of streaming's largest impacts was on DVD, which has become less popular with the mass popularization of online streaming of media. Media streaming's popularization caused many DVD rental companies, such as Blockbuster, to go out of business. In July 2015, The New York Times published an article about Netflix's DVD-by-mail services. It stated that Netflix was continuing their DVD services with 5.3 million subscribers, which was a significant decrease from the previous year, but their streaming services had 65 million members. Netflix's primary business is its subscription-based streaming service, which offers online streaming of a library of films and television programs, including those produced in-house. As of April 2019, Netflix had over 148 million paid subscriptions worldwide, including 60 million in the United States, and over 154 million subscriptions total, including free trials. It is available worldwide except in mainland China, Syria, North Korea, and Crimea. The company also has offices in India, the Netherlands, Brazil, Japan, and South Korea. Netflix is a member of the Motion Picture Association. Netflix began producing media itself in 2012 and since then took more of an active role as producer and distributor for both films and television series. Following the launch of various streaming services during the early 2020s, in particular those operated by the major Hollywood studios, home video continued to decline. One of the most prominent examples of this effect was with Walt Disney Studios Home Entertainment, which, following the launch of Disney+ in 2019 and its international expansion in the following years, began to discontinue physical distribution entirely in certain regions such as Latin America, Asia (excluding Japan), Australia, New Zealand, Portugal, and Hungary, or to outsource its activities to other regional distributors.
The Special-Interest Video Boom
Until the mid-1980s, home video was dominated by feature film theatrical releases such as The Wizard of Oz, Citizen Kane, and Casablanca from major film studios. At that time, not many people owned a VCR, and those who did tended to rent rather than buy videos. The late 1980s saw the emergence of a great many small companies which specialized in producing special-interest home videos, also known as nontheatrical programming and alternative programming. These new video programs differed radically from earlier forms of video content in that they were never intended for theatrical exhibition nor television broadcasting. They were created specifically for niche audiences in the so-called sell-through channel, to be purchased at retail or ordered directly by consumers and viewed exclusively as home videos. It was pointed out at the time that special-interest video increased to larger audiences the number of topics, including dog handling videos, back pain videos, and cooking videos, which were not previously thought of as marketable. Next, even golf and skiing tapes started selling. Contemporary sources noted, new technology has changed the territory of the home video market. This boom in special-interest video production reflected a growing demand for diverse and specialized content that could not be found in traditional media. It also demonstrated the versatility of home video as a medium, capable of catering to a wide range of interests and needs. The success of these niche videos paved the way for the development of more specialized content in the years to come, including educational programs, instructional guides, and even adult entertainment.
The Future of Home Video
The future of home video is uncertain, as the industry continues to evolve in response to changing consumer preferences and technological advancements. The rise of streaming services has led to a decline in the popularity of physical media, with many consumers opting for the convenience and accessibility of online streaming. However, there is still a market for physical media, particularly among collectors and enthusiasts who appreciate the tangible nature of DVDs and Blu-rays. The home video industry has also seen the emergence of new formats, such as 4K and 8K Ultra HD, which offer even higher resolution and better picture quality than previous formats. The industry is also exploring new distribution models, such as direct-to-consumer sales and subscription-based services. Despite the challenges, the home video industry remains a vital part of the entertainment landscape, providing consumers with a wide range of content and options for viewing their favorite films and television programs. The industry's ability to adapt to changing consumer preferences and technological advancements will determine its future success.