Kihara grumbled, "The construction of a VCR is very complex. It will be extremely difficult to build a machine that will use a cassette tape, let alone in color. You don't understand what you are asking the engineers to do!" Nevertheless, Ibuka persisted with Kihara; "Look how easy audio tape recorders can be used thanks to the cassette tape! Why can't we incorporate this function into video players? This is the obvious next step that has to be taken in the development of this product." Deep down, Kihara knew that Ibuka was right.

The task then was to incorporate into the VCR deck the hold and play functions into the VCR deck. These functions had previously been performed by the devices on top of the deck. This was to be achieved with a cassette tape that could be used in a similar fashion to those used by audio tape recorders. However, in the case of a VCR, a further mechanism had to be included to automatically pull the tape from the cassette case so that the tape could pass over the drums attached to the record and playback heads. In other words, not only did the VCR have to play a tape housed in a cassette; it had to have an automatic loading function too.

Thus, Kihara and his team recognized three major challenges: to incorporate color, to develop a video cassette tape, and to design an automatic loading function. They developed countless prototypes, but most were unusable. Despite the obstacles, and after many failed attempts, Kihara eventually delivered the first usable prototype in 1968.

The next hurdle was to develop an automatic loading system. "Nothing too complex," urged Kihara, "try to find a simple and reasonable design. Remember that it must be easy for people to use." With this request in mind, Horiuchi and Watanabe began to build a sturdy, uncomplicated loading mechanism that was easy on the tape and would automatically pull it from the cassette case and feed it over the rotary drum heads without damaging nor putting excess tension on the tape. Many ideas were proposed for the new loading mechanism, including those with unique names such as the "Cast Net" system and the "Ranch" system. After exhaustive research, the development team was confident it had devised a mechanism that could be used for cassette tape VCRs, the "U-loading" system. The name was derived from the U-shaped figure the tape followed when seen from above. Since its design minimized the amount of tension applied to the tape during record and playback, this loading system was able to truly cut tape vibration that caused jittering. Moreover, the new design ensured that the tape would play at a constant speed.

The only remaining hurdle was to provide color. A color system called the "Y/C Signal Separation System," which recorded luminance and color signals on different tracks, already existed. But the development team decided to devise a new system based on an idea conceived by Toshihiko Numakura. Called the "Color-Under System," this recorded color and luminance signals on the same track by employing a frequency modulator. Also known as the "Numakura Patent," it became the system on which subsequent VTR color-recording systems were based.

Enthused by the passion of Kihara and supported by the contributions made by the Sendai factory, the 2nd Development Division solved their three major tasks and achieved the goal of placing the awkward seven-inch size reel tape into a cassette tape.

Popularly known as the "Kihara's School," the 2nd Development Division operated with the goal of nurturing talented personnel while creating new technologies. Kihara created an environment where young engineers could think freely and apply the latest technologies to create new products.

Kihara was involved with all of Sony's magnetic recording technology developments--the wire corder, audio tape recorder and VTR. All of these products became the leading electronics products of their time. Kihara emphasized to his protégeé the importance of setting a clear target and then focusing one's energies on achieving that target.

Engineers Akinao Horiuchi and Yoshimi Watanabe were given the difficult task of developing the new cassette tape system. Their first step was to reduce the amount of tape required to display video images. In other words, their goal was to compress as much information on to the shortest length of tape possible. Horiuchi and Watanabe began by looking for a tape with a higher recording density than the gamma-iron tape that was widely used for recording video at the time. The answer was provided by the Sendai factory in the form of chrome-oxidized tape, which the development team was able to adapt for video use. The supply and take-up reels that had traditionally been placed in a side-by-side arrangement were instead placed in a slightly overlapping configuration, saving space and enabling a cassette tape of more compact design.

Sony began work on developing prototype home-use VCRs based on these two new technologies. Creating the new machines was like building a castle from stone blocks. Employees in charge of different aspects of the project would carve their own building blocks and drag them before the design team, which would then carefully place each block in position until the ideal castle was completed. The prototypes were grand conglomerations of materials, parts, and circuits, each one being as indispensable to the operation of the machine as any other. Important contributions to the prototypes came from many areas of the company. The Sendai factory supplied an important component such as a high-density recording tape. The Semiconductor Group in Atsugi made a major contribution by coming up with a design for a new integrated circuit (IC).

In 1973, after the development of the prototypes was completed, Kohno's group was separated from the 2nd Development Division and became the Betamax R&D Group (Gijutsu Junbi-shitsu). This group concentrated on preparing production facilities for the new VCRs. Kihara's School was effectively disbanded, and the personnel in charge of individual projects were relocated to establish independent production and business divisions. In this way, the product development process was carried through to the very end, with the original product ideas, concepts and the knowledge accumulated in the development process being effectively utilized in both production and marketing.

Sony had to think of an appropriate name for this definitive product. What Kihara called the "Azimuth Recording" had been nicknamed the "Beta Recording," "beta" being the Japanese word used to describe the way signals were recorded onto the tape. From this sprung the idea of using the word "beta." Just as the tape path in the U-matic loading system resembled the letter "U," the tape path in the new loading system closely resembled the Greek letter or beta, when seen from above. This symbol is associated with good luck and can be construed as a drawn out pronunciation of the English word "better." "Max," an abbreviation of the word "maximum" was intended to impart a meaning of grandness, and was then added to the end. The name "Betamax" was born.

While Sony believed it had a revolutionary product on its hands, it still had to convince consumers throughout the world how to benefit from a Betamax VCR in their homes. Morita thought the best way to achieve this was through a short, catchy slogan, and the slogan "time-shift" was created. This encapsulated the core concept behind the Betamax; to build a machine that frees consumers from the constraints of watching television programs on the day they are broadcast. With the time-shift function, consumers could record their favorite programs and watch them whenever they liked.