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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."