Do you remember CED videodiscs? If you don‘t, you‘re not alone. CED – or Capacitance Electronic Disc – was a format that spun onto the home video scene in 1981 only to quickly fizzle out in epic fashion. Backed by consumer tech giant RCA, CED‘s abject failure just a few years post-launch is an instructive case study about the merciless nature of markets. When timing and positioning are misjudged, even the most promising innovations can crash hard.
Overview: What Was CED and Why Did It Fail?
Before we dive deeper, let‘s quickly recap what exactly CED was and why it failed:
- What: CED (aka SelectaVision) was an analog video disc format developed by RCA that stored video signals in vinyl disc-style grooves
- How It Worked: A stylus mechanism played back signals encoded on the discs to produce moving images on a TV screen
- Why It Failed: Despite years in development and heavy investment by RCA, CED flopped immediately upon launch because it missed the window of opportunity. Rival VHS had already won over consumers who now expected recording functionality that CED lacked.
Now that we have the basic backstory, let‘s rewind and trace CED‘s full history – from ambitious beginnings to ignominious ending. Analyzing the missteps and oversights will illustrate why timing is so precarious, especially for formats jockeying for position.
The Quest for a "Discpix" Home Video System
RCA engineers first started researching concepts for a videodisc playback system in 1964. For years, the small team quietly toiled away on Project Discpix, patenting various ideas along the journey.
Technical hurdles abounded, especially around displaying sufficient video quality. But by 1972, a workable prototype was completed that could hold 10 minutes of color video per side – hardly usable but a start nonetheless.
RCA recognized that home video could become a massive market. However, manufacturing and cost challenges meant that Discpix wouldn‘t be commercial ready for years. In the interim, Sony unveiled the Betamax videocassette recorder (VCR) in 1975. JVC followed shortly after with the VHS system in 1976. Magnetic tape formats had beaten RCA‘s disc format to market.
But RCA remained undeterred…
CED Finally Emerges to Face Entrenched Competition
Despite having a 15-year head start, it wasn‘t until 1981 that RCA finally introduced its videodisc format as "SelectaVision CED". After considerable engineering to upgrade capacity and quality, RCA felt it now had a competitive system:
| Product Name | Capacitance Electronic Disc (CED) |
| Type | Analog video disc playback |
| Capacity | 60 minutes per side |
| Video Quality | 240p |
However, the home video landscape had completely changed during CED‘s prolonged development:
- Millions of households already owned VCRs
- VHS possessed 70% market share to Betamax‘s 30%
- Prices of tape machines had plummeted from ~$1,300 to sub-$500
- Tapes outsold discs by 50:1 ratio
Still, RCA felt CED‘s vinyl album-esque form factor and features would attract many customers. And with the RCA brand‘s reputation for quality, CED could displace tapes as the preferred home video standard.
If only that vision proved accurate…
Launch Bombs Despite Aggressive Efforts
CED players launched at $500 while individual discs went for $15. Interest was far below expectations though.
RCA projected selling 200,000 CED units in Year 1 but only managed to move 100,000 lifetime! Even desperate price cuts down to $200 couldn‘t entice households happy with their VCRs.
One key oversight was that CED couldn‘t record shows – a basic expectation by 1981. And VHS studios partnerships ensured far more movie title availability on tape.
By 1984, RCA had sunk over $600 million into development and marketing but had almost nothing to show for it, having sold only 550,000 players lifetime. The CED format was permanently discontinued after barely 3 years in market.
RCA‘s massive miscalculation ended up crippling the company…
Strategic Blunders That Set the Stage for Failure
Beyond just bungled timing, we can pinpoint flaws in strategy and execution that direction contributed to CED‘s rapid downfall:
1. Technical Oversight – RCA expended enormous engineering resources trying to perfect an elegant but ultimately unnecessary videodisc solution. The market simply didn‘t need discs.
2. Failure to Pivot – Even after seeing VHS take off, RCA stubbornly stuck to its roadmap rather than incorporating features like recording that buyers demanded.
3. Lack of Partnerships – Unlike VHS backers who coordinated extensively, RCA tried to single-handedly establish a new format. Turns out allies are very helpful!
On paper, CED checked all the boxes as a nifty innovation. However, the real-world home video market evolved faster than RCA could react. Coupled with strategic rigidity, CED was doomed right from launch.
The Final Blow: Twin Failures Crater RCA
As if CED wasn‘t damaging enough, RCA made another colossal error by attempting to compete with IBM in mainframe computers. After hemorrhaging >$500M over 5 years in the hopeless effort, RCA withdrew from that market in 1976.
Between the twin disasters, RCA had wasted over $1 billion in shareholder money. Cash strapped and directionless, the company was acquired in 1986 by General Electric – closing the books on RCA‘s history as an independent player.
Key Takeaways – Why Timing Matters So Much
The CED saga perfectly illustrates the old adage that "timing is everything" in business and technology. Even sensationally engineered products will flop if the market landscape has evolved past the value proposition.
Incumbents enjoy immense advantages which are difficult for late entrants to surmount. Savvy market leaders stay attuned to customer needs and adjust accordingly. Laggards tend to double-down on original assumptions only to miss the target.
RCA‘s shockingly rapid fall from dominance reinforces that success draws from more than just good engineering. Understanding consumer wants, forging partnerships, pivoting quickly – these capabilities separate winners from losers in the high-risk, high-reward technology product game. Timing is indeed everything.
