DVD came on the scene in the late 1990s, but the story actually begins in the early 1960s. In 1961, optical recording technology was patented by David Paul Gregg and James Russell. It wasn't until the 70s that progress was seen on this front and in 1978 the Laserdisc format was released. Laserdisc was the major predecessor to DVDs, but it never really gained widespread popularity, due to its numerous drawbacks. The discs were massive and you couldn't even fit a whole movie on one side of a disc. Laserdisc never challenged the dominance of VHS.
In 1986, Warner Home Video started saying that a new format should be developed where movies were stored on a five-inch optical disc like a Compact Disc used for music. The next year in 1987, another precursor to the DVD came out, the CD Video format. This was a sort of amalgamation of CD and Laserdisc technology. It didn't go over well (partially because of very small storage size) and was basically gone by 1991.
However, a similarly titled Video CD format was released in 1993. It was a bit more popular than CD Video, especially in Southeast Asia, but it still never really caught on. A major problem with the format was that there was no way of stopping people from making illegal copies.
As the Video CD was coming out, a group of companies that included Warner, Pioneer, JVC, Toshiba and others was working out a new home video format they were calling the Super Density Disc.
The only problem was that the Philips corporation had the rights to some very important patents regarding optical discs that could be useful. Warner, Toshiba, and the others reached out to Philips to get them to collaborate on the project.
However, Philips had other ideas and they started working on their own project with Sony called the Multimedia Compact Disc. The stage was set for another format war just like VHS versus Betamax.
