The History Of Cartridge Television

The first Cartrivisions went on sale in June 1972 at 18 Sears stores in the Chicago area.  “From Dream to Product in two years” Frank Stanton, President of Cartridge Television Inc. announced at a party to mark the historic occasion.  Like the Sony Betamax which would come 3 years later, the Cartrivision was a videocassette recorder that came equipped to record programs off the air.  The cassettes used ½ inch tape and “skip field” recording technology to enable Cartrivision to put almost 2 hours of material on a single cassette.  Several Hollywood film studios agreed to make their films available to CTI, and Columbia Pictures became a partner in the Cartridge Rental Network, a company set up to handle the distribution of movies on Cartrivision cartridges.  Sears, Roebuck agreed to help at the retail level.  Cartrivision was off and running! 

Around this time Frank Stanton and his partners in CTI persuaded Avco, a major defense contractor, to invest millions of dollars into building a facility for making recorder-player units, and in also building a cassette and recording head factory in San Jose, California.  More investment money was raised in a Cartrivision stock offering, which helped raised $20 million.  The initial Cartrivision tape catalog consisted of 110 titles for sale including Fishing with Gadabout Gaddis, Rembrandt and the Bible, etc.  The catalog of red cassettes (rentals only) consisted mainly of big budget Hollywood movies.  The Chicago area newspapers ran a double-page ad to introduce prospective buyers to the new system.  While there was interest in the new system, many factors including the large sticker price ($1600), lack of availability of prerecorded media, buyers unable to secure credit to purchase the set, etc., meant that the system was not moving from the stores.  On top of that the salespeople were not really trained on the system and treated it as just a rather large TV set.

Just as the system was being introduced nationally, the biggest setback to date happened to Cartridge Television Inc.  In November 1972, with Christmas just around the corner, all of the tape sitting in warehouses and in stores all over the country spontaneously began to decompose.  Almost the whole inventory of tape was defective and had to be recalled because the faulty tape could destroy the systems tape heads if played on the machine.  The effect of this is that the company had all of the machines out there, but with nothing to play on it.  By this time in early 1973 the company had only sold a total of 2500 Cartrivision units.  In early 1973 the company launched a massive campaign to prove to the public that the machines worked and that there would be sufficient software available to people buying the machines.  The company launched a large west coast drive in which the goal was that each store would be sufficiently trained in the use of the Cartrivision and that they would have a sufficient supply of cassettes available.  This test market involved around 130 stores and included Sears, Wards, Macy’s, and a number of smaller appliance stores. 

After a couple of months things were picking up for the company due to the west coast promotion.  Buyers were renting on average of 3 tapes a week and the hardware was selling very nicely.  Avco had agreed to help out with 4 year consumer loans and free movie rentals were being given out with each machine sold.  Based on this Sears, Roebuck told Avco that they were ready to break out nationally and carry Cartrivision in all of their outlets.  During this same time period though investors and Wall Street began to take a close look at CTI, especially at the gap between expenses and earnings.  Cartrivision had been conceived on a major scale and it had the budget to match.  In fact, the company had prepared for this eventual success by investing in a state-of-the-art tape duplication system.  Also large amounts of money had gone into nationwide advertising campaigns.  Cartrivision also had hired over 300 workers at their Palo Alto headquarters as well as offices in New York.  When Wall Street looked at all of this and compared it to the small revenue that was coming in, it lowered its opinion of Cartrivision’s stock from $20 a share down to $9.  By this time up to $40 million had been invested in this project and Frank Stanton was forced to cut most of the fat from the company just to stay afloat.  This included laying off employees and also putting on hold projects that the company had been working on. 

By June of 1973 the stock was downgraded again, this time to $3 a share and it was at that time that the board of directors of Avco decided enough was enough and pulled the plug on Cartrivision, writing off an investment that was close to 50 million dollars.  Stanton and his colleagues were forced to file for bankruptcy.  For months afterwards Stanton searched for a potential savior to resurrect Cartrivision.  In his estimation 10 million dollars would have made all of the difference and would have allowed Cartrivision to continue and to eventually dominate the industry.  Unfortunately when potential investors looked at the cold hard facts, apart from the 2 month period of improved sales on the West coast, everything else looked rather negative.  In reality the only companies that could have stepped in to save Cartrivision (Zenith, GE, etc.) were all companies that had originally passed on the idea when first offered.  This was essentially the end of Cartrivision.  All of the excess Cartrivision inventory in California was auctioned off (some of it straight from the production lines) and ended up in the hands of dealers who specialized in mail order electronics.  There was a healthy trade in Cartrivision hardware even up to the mid 1980’s I have heard.