Didn't even know these things existed, even though our family had the first vhs and cd players in our neighborhood.
Amazing that they actually got this to somewhat work, persistent fellows :)
In the summer of 1982, I remember watching a movie from one in the dorm commons building. I don't remember the movie, but my bias is toward 2001. Anyway, I suspect they lost out because the \R in VCR is for "recording". There's a bit of compact cassette versus 8-track in the way things worked out.
Eh, I think the success of the DVD and now Blu-ray formats show recording isn't essential. As the article notes, this format, and I'll note another format in Japan using a stylus over a bunch of holes, failed in the face of VHS and Laserdiscs.
Cassettes won in part because they were a lot smaller and could eventually play stereo, and 8-track tapes are a terrible, fragile kludge (my family used to make them back when pirating them was legal, as long as you paid ASCAP ... or tried to pay them, they never accepted the money my father set aside).
I would guess that recording was essential for VHS's success. By the time DVD became successful, ca. 2000, there was a infrastructure of video rentals available and hard disk recording of movies became possible/was just around the corner. So the killer app for VHS was recoding TV, while the killer app for DvD was rentals and somewhat ambitious home video creators would go digital.
I guess it depends on how much of a success you consider Laserdisc to be. It wasn't a blowout success like DVD, but it was a healthy niche.
I got the strong impression that DVDs were sell-through, a market I think Disney pioneered. So maybe video rental wasn't so important for DVDs, but I don't know.
You are of course right that recording was a killer app for VHS, lots of time shifting ... although, hasn't VHS died without most people replacing it with recording to hard disks? I'm not sure TiVo got big enough, but I don't know.
As brudgers points out in his reply in this subthread, recording got big enough to worry the content holders such that they imposed DRM on DVDs and Blu-ray, but it's not clear their fears are realistic. Certainly the cracking of DVD DRM didn't stop production of them.
We used to rent these discs when I was a teenager. They were terribly unreliable. Skipping, stopping, starting over, my god it was a miracle to reach the end.
And that's just side one; halfway through you gotta get up off the couch and flip it over and do the whole gauntlet again.