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By 1976, the year following the launch of Betamax, the Vietnam War had ended and North and South Vietnam were reunified. Sony celebrated its 30th anniversary that year, and Morita proudly announced the birth of the post color television era, the video age. The introduction of the home-use VCR had caused the biggest stir and created the greatest expectations for Sony since the launch of the Trinitron. Sony sales branches throughout Japan were buzzing about Betamax, and how to launch it in their regions became their number one priority. From the pre-launch stage, study sessions and training seminars explaining how to connect a Betamax to a television were frequent. At that time, however, annual domestic demand for VCRs was still less than 100,000 units. Morita was brimming with confidence when he made his announcement about the upcoming video age. Would home-use VCRs become popular? The industry had its doubts. At any rate, full-scale production of Betamax looked ready to roll. However, in the same year, something happened which took Sony by surprise.
In September 1976, JVC announced the VHS-format VCR to compete head to head against Betamax. With this announcement, the VCR format battle began. The JVC product boasted two hours of recording time twice that of Betamax. The year before the Betamax release, Sony had approached Matsushita and JVC, its two partners for the U Format, about unifying product specifications. At that time, Sony had disclosed information regarding the Betamax specifications and technology to the two companies. In response, Matsushita and JVC delayed any decisions about unifying standards for a year. After Sony announced the advent of the video age and followed this with an aggressive sales drive, JVC began its own highly effective advertising campaign.
Sony took a closer look at the VHS format and everyone was aghast. The technology and know-how that Sony had willingly disclosed when it proposed the unification of the U and Beta formats was incorporated in the VHS format. Although Sony had freely given the two companies access to its basic, patented technology, it was impossible for Sony to hide its shock and surprise.
Even though Sony's Beta format and JVC's VHS format were technologically similar, the cassette sizes were different. The two were not compatible. The fact that there was more than one format foretold a grueling struggle for leadership in the home-use VCR market and a deepening fight for market share. The last thing either side wanted was to inconvenience the user. But the VCR war had begun and everyone was running for cover.
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Sony and JVC each courted a group of companies throughout 1976. Matsushita, a member of the U Format group, was ambivalent about where it stood. As the year drew to a close, Morita and Kihara visited Konosuke Matsushita, an adviser to Matsushita, at the company's head office in Osaka to receive a final decision concerning format unification. Samples of the Sony and JVC products with their lids removed were placed on the desk. Matsushita was forthright in his position. He said,  It pains me to have to reject Betamax, but the JVC product has fewer components. My company must choose the product that can be manufactured more cheaply, whether by 100 yen or 1000 yen per unit. That is the only way to overcome the disadvantage of being a latecomer.
One can imagine how Morita and Kihara felt upon hearing these words. In the end, Sony Toshiba, Sanyo Electric, NEC, Aiwa, and Pioneer supported Sony's Beta format. Matsushita, Hitachi, Mitsubishi Electric, Sharp, and Akai Electric accepted JVC's VHS format. The home electronics industry was thus divided into two camps.
Of course, Sony had complete confidence in its Beta format for home-use VCRs. Although the recording time was only one hour, the cassette size was smaller and the image quality was clearly superior. Moreover, technology that enabled two-hour recording while maintaining high picture quality had already been developed. If possible, Sony wished to achieve unification under its basic format. Toward this end, Sony continued working diligently to make prototype equipment available to potential format partners.
Sony embarked on an aggressive strategy as the leader of the Beta camp. Both groups released a continuous stream of new products. They worked furiously to enhance picture quality, lengthen recording time, diversify product functions, and improve operability.
By 1979, annual industry production of home-use VCRs in Japan had reached 2.2 million units, about eight times the volume produced in 1976. Although the industry was divided into two distinct camps, the video age had clearly become a reality.
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