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Running slower means you have less space.

Dude, think of it like a photograph. If you had a lens that could squeeze a square frame into a narrower rectangle, you could advance the film any distance between frames, and scrunch the image to take up that much space. But the slower the film moves - the less distance there is between frames - and the scrunchier each image gets. There's an upper limit to how much detail any given area can capture. The film grain quickly becomes visible. When the image gets blown back up to its regular shape, some of the information has been lost, because the medium has finite detail.

A slow hard drive takes longer to access information. Video tape doesn't work that way. It displays in real time. When it moves at one inch per second, every frame gets 1/60th of an inch.

And at some point, it doesn't matter how much detail the head tries to write - the tape itself has limits. There are physical bits of metal, suspended in goo, stuck to clear plastic. The engineers of the format chose the lowest tape speed that could hold enough information for a picture with acceptable quality. If they could have stored the same information by running slower - they would have. And it would save the manufacturer a shitload of money, since they'd need less physical tape inside each cassette.