Live audio: Power requirements calculation: How?

[Amnesiac]

Im courious as to how do they come up with the equipment needs for big concerts.
A friend of mine told me the calculation used is based on quantity of attendants, 1 watt per person in the audience, but it sounds kind of vague to me.

What are the calculations used to figure out how much power is needed to properly deliver sound reinforcement to a big audience? (or a small audience for that matter)

Does it depend on venue size or on quantity of people in the audience?
Does it vary depending on the type of venue?(outdoors or indoors locations)

Please share any link or related reading, video, or published material around this topic you might have


Thank you!!