Nobody knows how big the porn industry is. With few exceptions, such
as Playboy, New Frontier (NOOF), Private, Beate Uhse on the Frankfurt
Stock Exchange, porn companies are privately held and its owners have
little incentive to reveal accurate financial information to the public.
The best we can do is compare and contrast the various estimates.
The porn industry (through its trade magazine Adult Video News) tends
to inflate its size because that makes porn seem more powerful and respectable.
Conservative critics of porn usually want to lowball the size of the industry
to make it appear more marginal.
When AVN estimates U.S. DVD sales and rentals for 2005 at $4.28 billion,
there is no way that that figure is an underestimate (because it would
be against porn's interest to underestimate its size and AVN is the spokesman
for porn). When AVN notes that that sales and rental figure has been essentially
flat since 1996, there is no way that AVN is underestimating. When AVN
(and the U.S.'s largest porn distributor IVD) said there were almost 13,600
new releases in 2005, there is no way they are underestimating.
Porn has released about 10,000 or more titles annually (according to
AVN and IVD) since 1999. AVN estimates $1.006 billion in wholesale porn
VHS and DVD sales in 2005. Since 1996, AVN has estimated wholesale porn
DVD and VHS sales at no less than about $800 million.
The Video Software Dealers Association (VSDA) is the trade group for
American DVD/Video/software dealers. Their incentive is to make their
industry look as powerful as possible. There's no way they are underestimating
their industry's size.
VSDA estimates U.S. DVD/video sales and rentals at $24.3 billion for
2005. That's up from the VSDA's $20 billion estimate for 2000.
According to page 19 of Corbell.com's DVD Statistical Report, 8th Edition,
the 2005 Annual Report on the Home Entertainment Industry from the VSDA
placed Adult DVDs as comprising 2% of all DVD releases.
If this 2% held over for total share of the DVD market, that would make
porn DVD sales and rentals a $486 million business for 2005.
On page 20 of that same report from Corbell, it lists the top six genres
for sell-through DVDs: Feature Films (51%), Children's Theatrical (17%),
TV (16%), Special Interest (8%), Children's Non-Theatrical (5%) and Music
(3%). Adult does not show up.
If Adult comprised only 3% of the sell-through DVD market, then it would've
shown up in this listing (sourced by Corbell's report to recordingmedia.org
and www.uands.com), I believe. That means that Adult must comprise no
more than 2% of the sell-through DVD market or that the two sources for
Corbell's listing do not consider Adult sales.
According to the VSDA, there are approximately twice as many dollars
spent on sales as rentals. If this ratio holds for porn, DVD/video sales
would amount to $324 million for 2005.
According to the VSDA Annual Report 2005, DVD comprises over 90% of the
home video market. According to the Digital Entertainment Group (quoted
in the June 8, 2006 issue of DVD News), the DVD format will be 99% of
the business in 2006 with VHS making up 1% of the market.
Tom Adams of Adams Media Research told Dan Ackman of Forbes (article
published May 25, 2001) that porn, at most, accounted for 10% of total
DVD/video sales and rentals. Tom Adams said his $1.8 billion estimate
of aggregate porn sales and rentals for 2000 was "generous."
The 10% estimate would place porn sales and rentals for U.S. DVD and
video in 2005 at $2.43. If the mainstream ratio of twice as many dollars
spent on sales compared to rentals held for porn, DVD/VHS sales would
amount to $1.6 billion in 2005 (of which DVD sales increasingly creep
each day towards 100% of that figure).
Here's another way of looking at DVD sales: If there were 13,600 releases
in 2005, the highest possible average (median) number of units sold per
title would be 1,000 (according to the majority of my sources in the know)
and the median retail price would be about $10 each (half of new releases
are comps which retail for about $5 each and original movies at anywhere
from $5-$60 each with the majority of original new releases selling retail
for around $15 each), which would make for total DVD sales for 2005 releases
at $136 million. According to experienced distributors, dollar sales for
new titles the calendar year they are released are about half of those
for catalogue (older titles). So the combined DVD sales of new titles
($136 million) and catalogue ($272) would equal $408 million for 2005.
A leading porn distributor told me that the six biggest porn production
companies (in order: Evil Angel ($20 million), Vivid ($20 million), Zero
Tolerance ($15 million), Red Light District, Anabolic/Diabolic, Adam &
Eve) would sell no more than $100 million (wholesale?) a year worldwide.
In February 2007, I learn that from a source in distribution that porn
DVD sales for 2006 were down 10% from the year before and my source expects
such sales to drop 15% in 2007.
Here are some of the most commonly offered numbers on the industry:
* $57 billion worldwide, and $20 billion in the US. Source: AVN President
Paul Fishbein told 60 Minutes (November 21, 2003) but there's no evidence
presented to support this guess.
* AVN reported in its January 2006 issue that the porn industry did $12.6
billion business in the U.S. in 2005. $4.28 billion is in sales and rentals
of DVDs.
* $10-$14 billion annually in the US according to the May 18, 2001 New
York Times article by Frank Rich. This figure is an extrapolation of work
done by Forrester Research, which in 1998 released a study that claimed
the online porn industry did $750 million to $1 billion annually.
* Forrester researcher Tom Rhinelander told Dan Ackman for his May 25,
2001 Forbes piece that the company had given up trying to estimate the
size of the porn industry, online or otherwise.
* A March 2000 study by Datamonitor estimated Adult content to comprise
69% (about $1 billion of a total of $1.4 billion) of content revenues
in the United States and Western Europe for 1998. That Datamonitor study
predicted that online porn revenues would reach $3.1 billion in the U.S.
and Western Europe in 2003.
* In a March 2001 column for the Wall Street Journal online, veteran
journalist and author Lewis Perdue estimated that payments for bandwidth
(half of all bandwidth) to transmit porn at about $2 billion annually.
Perdue stuck by this figure in his October 2002 book EroticaBiz: How Sex
Shaped the Internet. The book was commissioned by Harper Collins but was
eventually self-published through IUniverse.
* LAT 4/19/06: The porn industry's main trade publication, Adult Video
News, estimated [U.S.] 2005 sales at $12.6 billion. But that figure is
difficult to verify because porn companies are private and closely held.
As with Hollywood, DVDs account for the largest piece of the porn industry's
revenue - 34%; for mainstream studios, they account for nearly 50%.
* WSJ 7/20/06: "Jupiter Research, a New York-based technology-research
firm, estimates that adult content on the Web may generate only about
$250 million a year in U.S. revenue. At the other extreme, Adult Video
News, an industry publication, estimates the figure at $2.5 billion."
Dan Ackman writes
in Forbes, May 25, 2001:
The idea that pornography is a $10 billion business is often credited
to a study by Forrester Research. This figure gets repeated over and
over. The only problem is that there is no such study. In 1998, Forrester
did publish a report on the online "adult content" industry, which it
pegged at $750 million to $1 billion in annual revenue. The $10 billion
aggregate figure was unsourced and mentioned in passing.
For the $10 billion figure to be accurate, you have to add in adult
video networks and pay-per-view movies on cable and satellite, Web sites,
in-room hotel movies, phone sex, sex toys and magazines--and still you
can't get there.
According to Adult Video News (AVN), an industry trade magazine, Americans
spent just over $4 billion to buy and rent adult videos last year. This
figure is baseless and wildly inflated. From there, the numbers get
even more obscure.
Tossing in the Internet will add less than $1 billion to the total
porn pie. The 1998 Forrester report pegs the online adult content market
at $750 million to $1 billion, which was an increase from its initial
estimate of $150 million. When a study admits that its initial result
was off by at least 80%, it's hard to be confident in the new result.
In any event, Tom Rhinelander, a Forrester research director, says they
have given up trying to put a price on porn--either on the Internet
or otherwise.
Its rival research outfit, Net Ratings, tracks the number of visitors
to porn Web sites. It says that in April 2001, there were 22.9 million
unique visitors to porn sites. This says nothing about how long each
visitor stayed or whether they spent a dime. In any event, the number
of visitors is less than the number who visited news sites (41.1 million),
finance sites (34.2 million) or greeting card sites (25.5 million).
When was the last time you heard anyone talk about how greeting card
sites dominate the Net?
The Business Of Smut: What Is It Worth?
Adult Video $500 million to $1.8 billion
Internet $1 billion
Pay-Per-View $128 million
Magazines $1 billion
Total $2.6 billion to $3.9 billion
Sources: Adams Media Research, Forrester Research, Veronis Suhler Communications
Industry Report, IVD
Does the adult video market have $4 billion in sales? Not even half
that. This figure comes from Adult Video News, an industry trade paper--not
from Variety, the Hollywood trade paper, which Rich cites. How Adult
Video News gets this number is not clear. We asked Adult Video News'
managing editor, Mike Ramone. "I don't know the exact methodology,"
he said, "It's a pie chart." Asked to break the figure down into sales
versus rentals, a standard practice among those who cover the video
industry, he said he didn't think it was available and suggested we
call the editor-in-chief, who didn't return our calls.
In fact, there is no chance that the adult video business has revenues
of even $2 billion. This hardly compares to the sales and rentals of
legitimate videos, which were roughly $20 billion last year, both according
to Adams Media Research and Variety. (Neither Adams nor Variety track
porn sales.)
No one tracks the adult video business with any rigor or precision,
Adams says. But his "most generous" estimate is that sales and rentals
combined are no higher than $1.8 billion. Adams starts with the mainstream
video business, which he says had rental income of $10.3 billion and
sales of $10.8 billion (both of which far exceed box office grosses,
which amounted to $7.67 billion last year, according go the National
Association of Theater Owners).
On the rental side, at least half the video stores nationally, including
industry leaders Blockbuster (nyse: BBI - news - people) and Hollywood
Video (nasdaq: HLYW - news - people), carry no porn titles. Of the 50%
(at most) of the stores that do, retailer surveys report that no more
than 20% of revenue is from porn. Thus, porn rentals amount to no more
than $1 billion.
As for video sales, much of the trade is through outlets like Wal-Mart
Stores (nyse: WMT - news - people) and Kmart (nyse: KM - news - people),
who stock no porn titles. There are, of course, the traditional adult
video and bookstores mostly in big cities, but this is a fringe distribution
channel at best. Internet and mail order may add to the total, but these
channels account for just 10% of legitimate sales. Overall, "There's
no way it could be 10% of the legitimate market," Adams says. His top
estimate for adult video sales is $800 million.
Adams calls his $1.8 billion aggregate generous. Some of the industry's
own numbers suggest a much lower figure. IVD, based in Hightstown, N.J.,
the nation's largest distributor, said that there are as many as 13,000
video releases per year. (There are many niche markets--boy-boy, fat
people, transvestites, freak shows--which add to the total, according
to an IVD spokesman.)
A typical release may sell 1,000 to 2,000 units. Using the high-end
figure, the industry sells about 26 million units. If the average unit
sells either directly or through rentals for $20--a high-end estimate
given the fact that the number of titles makes the product a commodity--that
means the adult video business grosses at best $520 million, not $4
billion.
All told, the adult video business takes in anywhere from one-tenth
to one-half the figure proffered by Adult Video News. Certainly, self-interested
statements by pornographers merit a second look.
Richard
Corliss writes for Time magazine online May 7, 2005:
2. How big is the porn video industry? "Pornography is big business,"
I wrote in the last column, "an industry that earns an estimated $57
billion worldwide annually -$20 billion just for adult movies in the
U.S., where some 800 million videos are rented each year, according
to Paul Fishbein, the founding president of Adult Video News."
Some readers questioned whether the porn industry was quite that extensive.
Tony Comstock writes: "I know there have been cuts to the Time Inc.
research staff, but you should really check those figures Fishbein gave
you. They're wildly exaggerated, probably by an order of magnitude."
In fact, the research staff for this column is me; and Fishbein gave
these stats not to me but to CBS News. (Could this have been another
network bollox-up, like the one about Bush in the National Guard?) A
more commonly cited number, from a Frank Rich story in the New York
Times Sunday Magazine, is $10 billion annually. This stat was widely
challenged: by Vivid Video president Bill Asher, who put the take at
$4 billion, by porn journalist L-ke F-rd, who estimated the take at
about $3 billion, and by Forbes Magazine's Dan Ackman, who calculated
it at about 5% of Rich's figure: "the adult video business grosses at
best $520 million" annually, he wrote.
I think Ackman is mistaking grosses for what Hollywood used to call
"rentals," the studios' share of the gross ticket sales, which it splits
with exhibitors. The porn equivalent of "rentals" is the income a company
like Vivid Video of VCA receives from its sale of movies to video outlets.
A video store may buy a porn title for $10 or $20, then rent it out
indefinitely, earning hundreds per cassette over time. Surely we want
to know what people spend on porn, not the percentage that dribbles
back to the producers.
I floated the high number, so I'm stuck with amending it. My updated
guess would be near Ford's number -which is about what the Lord of the
Rings trilogy earned in theaters. Not bad for a segment of the film
industry that spends thousands, not a $100 million or more, on an average
title. The strongest case that hard-core isn't as big as Rich said it
was: Where's the Bill Gates of porn?
Lewis Perdue writes in EroticaBiz:
So, based on that bandwidth analysis [published in the online edition
of the Wall Street Journal in March 2001], on SEC filings by sex-related
corporations, securities analysts' reports, and market research firms
such as Datamonitor, I will wade into the numbers fray and estimate
that the sex business in the United States takes in at least $16.2 billion
in legal, above-the-table revenues and another $15 billion in illegal
prostitution for a total of $31.2 billion.
U.S. Revenues: Market Segment 2000 (in Billions of Dollars)
Internet: 2.5
Adult Videos: 4.0
Strip Clubs: 3.1
Magazines: 1.0
Phone Sex: 1.0
Cable/Satellite: .5
CD-ROM & Novelties: .7
Bandwidth: 2.4
AOL: 1.0
The Video Software Dealers Association estimated that more than $19
billion was spent by American consumers renting or buying home videos
and DVDs in 2000. [Its 1997 estimate was that] sexually-related materials
comprised 16% of their market. If that percentage remains steady, it
would amount to $3 billion annually.
Jonathan
Silverstein writes for ABC News Jan 19, 2006:
Industry trade magazine Adult Video News estimates that the industry
reeled in about $12.6 billion in 2005 and estimates that more than $2.5
billion of that was from the Internet alone. [$4.28 billion in DVD sales
and rentals. In mainstream, the dollars from sales and from rentals
are approximately even.) For years, mainstream media have given the
adult industry a $10 billion price tag, saying it is as big, if not
bigger, than the Hollywood film industry. But according to many media
analysts, the numbers are unsubstantiated and the adult entertainment
industry is virtually untrackable - in terms of dollars spent. "There's
no reliable data available on the market," said Jan Saxton, vice president
of Adams Media Research. "It's too much of a gray-area business." Adams,
which does financial analysis of the filmed entertainment and digital
media markets, said the industry was too vast to cover.
Global Entertainment Expenditures
According to www.uands.com, consumer
spending (for movies, TV shows, DVD, VOD, PPV, VHS etc but not for internet
subscriptions) for 2006 will be $83.1 billion (cited in the July 6, 2006
issue of DVD News).
If porn accounted for (at most) 2% of DVD sales (see pages 19, 20 of
Corbell.com's DVD Statistical Report, 8th Edition) and if this number
holds true for porn's percentage of global spending on entertainment,
then porn worldwide would be a $1.662 billion industry.
VSDA estimates U.S. DVD/video sales and rentals at $24.3 billion for
2005. The 2% figure would place U.S. porn DVD/VHS sales and rentals at
$486 million for 2005.
The most commonly cited number for porn's worldwide size is $57 billion
(including internet subscriptions), which is what AVN President Paul Fishbein
told 60 Minutes (Nov 21, 2003 broadcast).
Here's the breakdown of the worldwide entertainment industry from www.uands.com:
Rank |
Entertainment Media |
Percentage |
1 |
DVD sell-through |
46% |
2 |
Box Office |
24% |
3 |
DVD Rental |
17% |
4 |
Pay TV, Cable, Satellite, PPV, VOD, etc |
13% |
As porn receives no money from box office sales, 2% of the remaining
revenues would amount to about $1.25 billion.
1/5/07
AVN
Estimates For Industry Size 2006
CHATSWORTH, Calif.--(BUSINESS WIRE)--Consumers are watching more adult
content on cable and pay-per-view, buying more sex toys and moving online,
according to AVN Media Network, operator of AVN.com, the most frequently
visited news site for the adult market. Dynamic shifts have occurred
in key segments of the market, which AVN estimates at $12.922 billion
in the United States, or just under $13 billion in 2006. Adult Movies
remain the largest sector at more than $3.6 billion or 28 percent of
the adult entertainment market. Falling prices for adult DVDs caused
a drop of 15 percent in revenue in that segment, but unit sales were
up, indicating a continuing market for adult films. Distribution over
cable channels showed the strongest growth in 2006 at 34 percent. AVN
estimates the Adult Cable/PayPerView segment (home and hotel TV movies)
now represents $1.75 billion in revenue, annually.
AVN report.
New
York Times reports.
The AVN report says: "AVN estimates that revenue from Video Sale
& Rental at retail brick and mortal locations has fallen by around 12%
from $3.4 billion to $3.2 billion. As compared to the mainstream sales
and rental, adult is only around 14% of the size of that $24.6 billion
dollar market. (The Entertainment Marketing Association (formerly VSDA)
does not include stores that sell only adult product in its reports, thus
estimates have been put forth previously that the adult market is 10%
of the size of mainstream.)"
2/8/07
Newsweek:
The adult film industry is unlikely to be worth as much as it claims—and
the Internet that made porn so pervasive is driving a sales slum
These numbers—specifically that the sales and rental of pornographic
videos and DVDs are a $3.6 billion industry—have been repeated so often
in industry and mainstream news outlets that they have acquired the
patina of fact. Throw in cable and satellite television, the Internet,
magazines, strip clubs and novelties, and the oft-bandied estimate balloons
to nearly $13 billion. In January Fox News took those numbers at face
value, citing Adult Video News trade magazine as its source.
But observers both inside and outside the industry have increasingly
been calling that figure into serious question. "It's bogus," says L-ke
Ford, a lone-wolf industry gossip columnist, former investigative journalist
and failed pornographer. "AVN is exaggerating by sevenfold on DVD sales
and rentals." Steven Hirsch, cofounder of Vivid Entertainment, one of
the world's largest adult film studios, with an estimated annual revenue
stream of $100 million, concedes, telling NEWSWEEK that "I think that's
a justifiable position to take."
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