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Pulling the public into accepting widescreen for the home market was like pulling teeth and took eons, and the dumbness of their refusal is frustrating in 20/20. My history lesson will follow:

As a short history lesson, widescreen really began when movies needed something to put them over the new format of television. That something was widescreen, where you'd see the wide picture like your eye's own vision, and weren't subject to a square. TV still was only that square, and that's the way it stayed for a very, very long time with widescreen in movies but standard full screen for TV.
That also affect anything that came on TV. TV shows obviously were that dimension, but films were also forced to be edited, and not just by cutting off the sides, but by the process of pan-and-scan where they cut off areas, and then moved focus along with whatever was moving in the scene (watch a TV edit of Ghostbusters and it's terrible and artificial). This also affected VHS releases, which were 99% fullscreen, and I don't remember seeing widescreen until DVD.

Widescreen finally came to TV with the DVD age (it may have been in Laserdisc; I don't know) and the increased popularity of widescreen DVDs really seems to have been what did it. It was like pulling teeth, though, because the public would not for the longest time accept those black bars and it took forever for fullscreen DVD to just finally die off.
Following that, widescreen TV's came into being to fit that new spectrum, and we entered into this age of HD, biggest picture, experience everything to perfection.

EDIT:
Oh, and another thing, after a while, theatrical films were being directed with scenes set up in a way where the focus of a scene was such that for TV and later home video they could cut off areas to fit it in the 4x3 television format. So there's that.

So the challenge here is to get widescreen television into existence and popularity earlier. The media innovations that surrounded it in the OTL will most likely surround it in such a scenario as well (widescreen VHS instead of DVD, TV shows shot for widescreen, and so forth). It'd also be interesting to discuss the ramifications of such a thing, one of which will be the studios losing an advantage they had over TV for a long time.
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