Outcome Uncertainty, Cost Difference, and Heterogeneous Demand across Spectating Options

This paper examines whether the effect of outcome uncertainty on sport demand differs across spectating options. Extending a reference-dependent preference framework, we allow reservation utility to vary across consumption channels that involve different financial and time costs. Using match-level data from the Korean professional soccer league for the 2018–2019 seasons, we employ a reduced-form empirical model based on our conceptual framework to analyze stadium attendance, television ratings, and online streaming viewership simultaneously. We estimate a system of demand equations using Seemingly Unrelated Regression and conduct cross-equation tests to compare how spectators across channels respond to match characteristics. The results provide partial support for the notion that heterogeneous consumption costs shape spectators’ expectations and reservation utilities across spectating options. Specifically, stadium attendance increased with outcome uncertainty while television and online viewership were not significantly associated with outcome uncertainty. Nonetheless, we do not find meaningful differences in the effects of outcome uncertainty from cross-equation tests. Additional analysis using an alternative measure of outcome uncertainty, however, suggest that television viewers respond more to broader perceptions of match competitiveness rather than to specific probability expectations. Overall, the observed heterogeneity was primarily concentrated between stadium attendance and media viewership, suggesting that differences in consumption costs and reservation utility may contribute to heterogeneous expectations across spectating options. These results imply that policies aimed at increasing competitive balance may primarily affect stadium attendance, whereas media audiences may respond more to comprehensive perceptions of match quality and attractiveness.