The Economics of the Global Entertainment Industry


After writing my last piece on the global economy and its investment implications, I realized that I mostly repeated what I said in an earlier article. Despite what the CNBC “talking heads” say, the fundamentals of the global economy change very slowly. Right now, global unemployment continues to rise. This means we have not yet reached the bottom. The investment implications of this are to find some safe, high yield investments. And when the economy does bottom out, you should invest in energy, food and emerging market countries while betting against the dollar.

When I have something new to say on this matter, I will let you know. But in the meantime, I will write a few articles on the global economics of things that interest me, such as the global entertainment industry.

The Economics of the Global Entertainment Industry

In an earlier posting, I outlined the implications of the several information revolutions we are passing through. More recently, I described in greater detail the implications of the print to digital transition. In this posting, I look more broadly at the global entertainment industry. I start with a caveat: the data are not exact:

  • I needed to make some heroic assumptions;
  • I am not an expert on the subject matter, and
  • Your definition of entertainment might differ from mine.

Nevertheless, the data will at least give you an order of magnitude.

Entertainment Defined

For this article, entertainment is defined as goods, services, or other activities that people pay for to enjoy in their leisure time. Some items are straightforward such as going to the movies or watching a sporting event. But some are more complex: are alcohol, drugs and cigarettes entertainment items, or are they purchased primarily to satisfy an addiction? There is no simple answer: certainly smokers will say they enjoy a smoke. In the case of drugs, a distinction can be made between the pain killing, highly addictive drugs such as morphine and heroin and the so-called entertainment drugs: marijuana, cocaine, and ecstasy. People also develop addictions to gambling and alcohol, but overall, I see them both as entertainment. Tourism presents a different sort of problem: there is no question people like to travel. But do they really like to travel: to fly somewhere? to stay in a hotel? Or does most of their real enjoyment start after they get to a destination

The Totals

The total sales by entertainment category are presented in the following table. Details on how these numbers were developed are presented in the remainder of the article

Entertainment Category

(in bil. US$)









Entertainment Drugs




















Computer Games


Live performances








For purposes of this study, both cigarettes and heroin are considered primarily as addictive drugs and not entertainment items. Cigarette sales are estimated at $336 billion annually, and global heroin sales are approximately $126 billion annually.


The Beverage Industry estimates global distilled spirits sales at $299 billion in 2008. Data from the Beverage Information Group and the Brewers Association of Japan indicates global beer consumption to be $614 billion. According to The International Organization of Vine and Wine and IWSR , global wine consumption was $250 in 2008.

Drugs – Cannabis, Cocaine, and Ecstasy

According to the UNODC 2008 Annual Report, 3.9% of the world’s population between 15-64, or 166 million people use cannabis. Worldwide, there are 41,000 metric tons of cannabis produced annually. At $10/gram, that generates $410 billion annually. Most of the high grade cannabis produced in the United States is grown in hidden fields or indoors. The number one producer is California with an annual revenue of nearly $14 billion.

According to the same report, 16 million people or 0.4% of the global population between 15-64 use cocaine. 994 metric tons of cocaine were produced in three Latin American countries (Bolivia, Colombia, and Peru). Most of this was probably sold in the US market. US retail prices fluctuate, but a recent estimate for a “pure” grain of cocaine in New York City was $123. That means the retail value of 994 metric tons is $122 billion.

Only 0.21% of the global population, or 8.4 million people aged 15-64 use Ecstacy. The UN report estimates global Ecstacy consumption to be 131 metric tons. At a recently estimated $25 per tablet price, this works out to approximately $13.8 billion in sales (8.4 million).


Prostitution is one of the largest entertainment industries in the world. In 1994, the industry generated revenues of more than $30 billion in only 4 Southeast Asian countries (Indonesia, Malaysia, Philippines, and Thailand) (ILO study). In Thailand alone, the study estimated it generated incomes of $22-24 billion.

These four countries constitute only 6.1% of the global population. If prostitution were practiced at the same rate per capita in the rest of the world, revenues from it 1994 would be over $360 billion. And they most certainly have grown since 1994. I have found no complete global survey, but particular country evidence suggests that prostitution revenues are large:

  • in Japan, earnings from prostitution in 1998 were estimated at $3.1 billion.
  • German prostitution revenues have been estimated at $8.4 billion EURs;
  • Zurich and Amsterdam have 11 prostitutes per 1,000 population;
  • Spain has 500,000 prostitutes earning $54 billion annually;
  • In Hungary, prostitution revenues exceed $1 billion;
  • Iran is estimated to have 300,000 prostitutes.

My guess is that there is more prostitution per capita in the 4 countries reference above than worldwide. That suggests perhaps $300 billion worldwide in 1994. But prostitution revenues have definitely increased since 1994. I believe a conservative estimate of prostitution revenues in 2009 is $400 billion.

Prostitution is probably like alcohol and drugs in that it will continue, legal or not. In fact, evidence suggests that legalizing and regulating prostitution can help in reducing HIV/AIDS infections.


People enjoy eating out. A recent estimate of global restaurant revenues was $550 billion. Not all of this can be attributed to entertainment. First, people need to eat to live. Let us assume that the entertainment component of eating out is 50% of restaurant revenues: that is, for entertainment reasons, people are willing to pay twice as much for food as they would have to pay if they ate at home. That gives us $275 billion. Of that amount, another third should be deducted for the eating out that was done for convenience/necessity reasons, e.g., lunch at work. That leaves $183 billion that is probably a pretty good estimate of the entertainment value of restaurants.


According to Screen Digest, 3,000 films are produced annually. Box office ticket revenues were $26.8 billion in 2008, with overall revenues amounting to $180 billion. Strategy Analytics has just published a report saying that for the first time, digital revenues from media and entertainment exceeded revenues from movie theaters and home video.


According to a Pricewaterhouse Coopers report released in June 2007, worldwide gambling revenue is expected to climb from $101.6 billion in 2006 to $144 billion by 2011 as the large Macau casino investments come into play. US gambling revenues are projected to increase 6.7% per year, from $57.5 billion to $79.6 billion. The Asian Pacific region, fast becoming the world’s second biggest casino market, can expect 15.7% growth in the 2006 to 2011 period from $14.6 billion to $30.3 billion.

Internet gambling revenue for offshore companies was estimated to be $5.9 billion in 2008 from players in the United States and $21.0 billion from players worldwide, according to H2 Gambling Capital. Internet gambling is anticipated to grow rapidly over the coming years.

Overall, I estimate gambling revenues at $110 billion in 2009.


Global pornographic revenues are approaching $100 billion (Top Ten Reviews). The sale and rental of videos is still the top revenue generator, but it will shortly be eclipsed by online sales and pay-per-view. Already, 12% of all web sites (4.2 million) are porn. Pay-per-view makes the major hotel chains some of the largest distributors of pornography. Pornographic production is a large business: in 2005, the US producers released 13,500 new films.


Major sports include World Football (soccer), US Football, Baseball, Basketball, and Hockey. Revenues on these sports are provided in a series done by Forbes magazine and are presented below.

In US Football, Forbes covers only the National Football League. College games and a professional league in Canada with slightly different rules also generate considerable revenue. I estimate that taken together, US football generates $10 billion.

Forbes only covers the top 25 professional teams in World Football. When receipts from World Footnball played in the rest of the world are added in, revenues are probably $20 billion.

Major professional baseball leagues operate in the United States and Japan. Forbes only covers US major league baseball. Baseball is played throughout Latin America as well. Globally, I estimate baseball revenues at $7 billion.

Basketball is gaining popularity throughout the world. In addition to the NBA in the United States, professional leagues exist in Europe and Asia. Forbes’ data only covers the NBA. I estimate global revenues at $5 billion.

Hockey is played in the United States, Canada, Europe, and Asia. Forbes covers only the NHL. I estimate global hockey revenues at $4 billion.

There are various auto racing venues: Formula One, NASCAR, etc. Formula One racing is probably the largest in terms of revenue generated and viewers. For major events, it has 55 million viewers that make it second only to the Olympics in terms of viewers- see Reuters estimates Formula One revenues at $2.2 billion annually. Building on this, I estimate global auto racing revenues at $7 billion.

There are many other sporting events that people pay to see – horse racing, cricket, rugby, polo. I estimate the revenues from these events at $10 billion.

Overall, I estimate sports revenues at $63 billion. These data are summarized in the table below.

Forbes Est. Global
  Revenues Revenues

(in US$ billions)

World Football (soccer)



US Football (NFL)






Auto Racing





Hockey (NHL)



The Rest





Computer Games

Computer games, a form of interactive entertainment, are growing rapidly. Revenues from software sales are estimated at $34.6 billion in 2009, with hardware sales generating another $18.9 billion.

Live Performances

Here, I include music, theater, opera, dance, and celebrity performances. Totals here are difficult to find. A recent study found that:

the Boston Symphony Orchestra is the world’s largest orchestral operation. Attendance at all BSO and BSO-produced concerts is estimated at nearly 1.5 million, with an annual budget now exceeding $80 million., considered the most successful orchestral web site in the country, launched in 1996 and currently receives approximately 7.6 million visits a year. Since the time of the launch, the site has generated $40 million, with $37 million generated over the last seven years. In 2007, brought in a record $5.8 million in revenue, a figure that is expected to be surpassed in 2008. Web sales make up about 30% of the organization’s overall ticket revenue, with online sales for Tanglewood reaching 40-45%.

Let us assume there are another 200 entities globally, with each generating $80 million in receipts. That would total $16 billion. How about the celebrity performers? The record for a concert series was $558 million by the Rolling Stones’ “Bigger Bang” tour over the 2005-2007 period. Madonna has the record for a single performer with her “Sticky” concert series in 2008. I estimate overall celebrity performer revenues at $10 billion. Overall, I estimate live performer revenues at $35 billion.


According to the World Travel & Tourism Council’s (WTTC) Tourism Satellite Account (TSA), world travel and tourism is expected to generate in excess of $7 trillion USD in 2007, rising to over $13 trillion USD in 2017. However, most of this involves flying to and from the tourist site and accommodations at the site. I do not consider flying somewhere and staying in a hotel as entertainment. And most of the entertainment activities at the site, such as eating in restaurants and gambling, have been estimated separately. The only item not included elsewhere are “scenic and sightseeing transportation services”. This item constituted less than 1% of the WTTC’s $7 trillion, or $25 billion.


According to the Recording Industry Association of America, sales of music totaled $7.1 billion in 2008. That included physical sales of $5.5 billion and digital sales of $1.6 billion. Physical sales continue to decline from their high of $14.6 billion in 1999.


According to the Tobacco Atlas, 5.6 trillion cig, 1.3 billion people or about 17% of the world’s population smoke cigarettes. Smoking is extremely addictive. 5.4 million people died from smoking in 2005. Information on cigarettes sold and revenues of the four leading cigarette companies globally, (China National Tobacco Company, Phillip Morris British American Tobacco, and Japan Tobacco International) are provided by this source. From this information, it is reasonable to assume the average global sale price for a cigarette is US$0.06. This would mean annual cigarette sales of $336 billion.


On one hand, the findings tell a pretty sorry tale about the human race: the leading entertainment items we purchase are alcohol, drugs, and prostitution. They are all escapes from everyone’s daily reality. But I want to emphasize that the above are the purchased entertainment items. Much of what entertains and gives us joy costs very little: taking a walk, socializing with friends, etc.

In doing work on this project, I was continually reminded of the move from physical to digital information transfer: consider what I reported on movies, music, and the growing importance of video games.

The content above was saved on the old Morss Global Finance website, just in case anyone was looking for it (with the help of
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