In a major competitive breakthrough for RCA Corp's soon-to-be-introduced video disc playback system, CBS Inc. signed an agreement with RCA to manufacture and distribute video discs compatible with the RCA system.
Many analysts think the video disc system will be the booming home entertainment market of the 1980s. Attached to a standard television set the machine plays pre-recorded movies or other programs.
RCA plans to introduce its video disc machine early next year. Presently Magnavox is marketing a video disc playback system on a limited basis, and MCA Inc. is manufacturing the pre-recorded discs.
The Magnavox system and the forthcoming RCA system aren't compatible, however. A disc that can be played on the RCA machine will not work on the Magnavox machine and vice-versa. The Magnavox unit uses a laser to "read" the disc, while RCA's will use a diamond stylus similar to that used in standard Phonograph record players.
"With both RCA and CBS producing discs compatible with the RCA machine, it will give RCA a big competitive boost," said one analyst.
"It's the first time I can remember that we've ever cooperated on anything," said one RCA official. RCA's National Broadcasting Co. subsidiary and CBS long have been broadcasting rivals. The two companies have also slugged it out in the color television market and the phonograph record market, among others.
The Magnavox-RCA discs are the only phonograph record-type playback systems that attach to home television sets. For several years, companies such as Sony have been selling video tape machines that either play back pre-recorded programs or record programs right off the air. The disc machines cannot make recordings.
The video tape home systems have been popular, but analysts think that the introduction of the video discs will increase substantially the number of households that purchase home entertainment systems that play back on their television screens.
The new machines and discs cost less than video tapes and playback machines and, if not easier to handle, are more familiar to the average person. m
The video disc is vinyl and similar in size to the standard long-playing record. CBS is the nation's biggest record company, and RCA is a major record producer as well.
RCA chairman Edgar Griffiths said the company expects to ship 200,000 of its new machines next year. By the end of the decade, video disc players will be in between 30 percent and 50 percent "of all U.S. color television homes," he said.
By 1990, sales could reach 5 million to 6 million machines and 200 million to 250 million discs a year, with combined sales of $7.5 billion or more.
Although it is being marketed on a limited basis, the Magnavox system has proved popular. MCA, which owns Universal Pictures, reported last year that demand for the discs far exceeded initial estimates.