Video Games in Industry: Analyzing Business Models and Techniques for Game Profitability & Success using Undertale as Case Study


From board games dating thousands of years ago like Go or Chess to more modern games like League of Legends, it is without a doubt that games are ingrained in our culture. For instance, 97% of children and adolescents in the US play games for at least one hour a day (Granic et al. 66). Video games encompass an artistic medium where various creative decisions can captivate or regrettably repel an audience. In this market, one wrong decision can greatly impact the success of a game– thus, impacting the profitability of it. According to Game marketing expert Chris Zukowski, the median indie game published on Steam earned just $1,136, with 68% of all titles earning less than $10,000 total (Zukowski). These values only include indie games that were polished enough to be sold on Steam, meaning that even a larger percentage of game developers take home almost no money. In such a tight market with thousands of indie creators competing with each other and large corporations, it becomes imperative to assess business models that drive the game industry. This paper seeks to look at Undertale, a widely popular indie game released in 2015 by Toby Fox, to identify what business strategies may have been utilized to make it successful. 

Business Model Canvas (BMC) 

In a study by authors Almér and Eriksson, they examine the Business Model Canvas, a successful framework developed by Osterwalder and Pigneur in 2010. This framework outlines 9 elements that entrepreneurs and business owners ought to consider when selling a product or service. They are listed and paraphrased below using the definitions provided in Almér and Eriksson’s paper. Additionally, there are examples of what this could look like in the game industry (Almér and Eriksson, 11-18).

  • Customer Segments: different groups of people that are typically the target audiences for the business → audience
    • PC, console, mobile gamers
  • Key Activities: things a business must do to make the BMC work → production, problem solving, platform/networking 
  • Value Proposition: what makes a product or service stand out from others– what gives a product value to a customer → innovation 
  • Key Resources: assets that allow for the product to be made → physical, intellectual, human, and financial resources
    • important ones include financial strength, technological excellence, & creativity
  • Customer Relationships: the relationship a business makes with different customer segments (i.e. catering to certain groups) → targeting demographics
  • Channels: how a business advertises its products to customer segments to demonstrate a value proposition → advertisement
    • pre-release advertisements
    • ads in magazines & TV
  • Key Partnerships: network of partners that facilitate the BMC for a business → collaboration
    • developers, publishers, or distributors
  • Cost Structure: expenses required to keep business running → expenditures
  • Revenue Streams: money obtained from each customer segment → willingness to pay
    • pay to play (P2P) – typically one time payment to get encompassing features
    • free to play (F2P) – create an incentive for players to stay online, where transactions occur then
    • hybrid models – strong shift to hybrid models to get a continuous stream of money

The BMC outlines nine key elements that game companies need to assess when developing a game. For large corporations, with hundreds of employees and large budgets, these elements can be optimized to make the game a success. However, for smaller creators, there may be many limitations that can lead to balancing where their resources should go towards. Essentially, how can indie creators and companies create a successful game despite not having enough resources to fulfill the BMC’s framework?

Undertale and the BMC

Undertale is a critically acclaimed indie RPG-style game mostly solo-developed by Toby Fox. In Undertale, players control a human child named Frisk who falls into an underground realm populated by monsters. The game offers players the choice to either fight or befriend these monsters, allowing for multiple paths and endings based on the player’s decisions. Despite being a small indie game, with very limited resources, Undertale was able to reach millions of people, becoming one of the most popular games in the 21st century. In the 2015 Game Awards, when Undertale was initially released, it sat beside titles like “Fallout 4, Bloodborne, and The Witcher 3,” popular games made by large giants in the industry (Isaac). By looking at what elements of the BMC that Undertale followed, we may be able to draw conclusions about how other indie games can also be successful despite varying limitations. 

Customer Segments & Customer Relationships

Undertale is a PC game, with an expected target audience of adolescents and young adults– though kids aren’t excluded from playing. This game is drawn in a simplistic old-school art style, which may be nostalgic to one of its target customer segments, which plays to its strengths. Despite not having cutting edge graphics, its aesthetic is able to entice its customer segments and garner a large audience. Fox created his game in a highly saturated field of RPGs, but with his own unique twist, allowing him to target fans of the genre. 

Resources: Key Resources, Channels, Key Partnerships, Cost Structure & Revenue Streams

These five elements in the BMC heavily focus on resources, focusing mainly on where money can go and where money can be obtained from. For Undertale, its main source of money for production came from a kickstarter, where it obtained a budget of around $50,000 (Isaac). While this may be significantly more than other indie game counterparts, this budget pales in comparison to large industry giants. Apart from Toby Fox and artist Temmie Chang, the core development team of Undertale, external assistance was kept to a minimum (Richter). This approach allowed Fox to maintain creative control and ensure the game’s vision remained true to his original ideas. By relying primarily on his own skills and limited assistance, Fox was able to maintain a high level of artistic integrity and deliver a unique gaming experience, while under the limitations of resources. Fox was able to obtain distributors for his game, notably Steam, where it sold over a million copies (Richter). 

Key Activities

With Fox being in a solo-team, working mostly by himself, he didn’t expect the game to quickly rise in popularity (Isaac). As such, there is very little documentation on the key activities that Fox worked on to make his game a success. Undertale is a game that Fox wasn’t intending to be on the top charts of Steam or widely discussed on social media. As an indie game, which didn’t build its construction using any particular business model or the BMC, what feature allowed it to become so successful? As mentioned, the graphics weren’t particularly amazing, there was very little advertising done, and it was mostly a one-man show. Yet, its intriguing concept and deviation from the norm in a skillfully crafted way is what allowed it to shine as one of the best games released in 2015. Thus, this brings me to the value proposition– essentially, what makes a game stand out. 

Value Proposition: Innovation In Games

One of the strongest elements that Undertale hinges itself on is value proposition. Although Fox ironically marketed his game as a “traditional roleplaying game where no one has to get hurt” in his kickstarter, his game is anything but a traditional RPG. In fact, one of its selling aspects is its innovation in the RPG field by presenting players with the agency to kill or peacefully spare monsters. In an analysis of product innovativeness in games, Franziska Handrich, Sven Heidenreich & Tobias Kraemer explore to what extent creativeness can lead to success. Their findings can be summarized in three categories of game innovativeness: presentation, game principle, and storyline (Handrich et al. 993). 

[Fig 1. Diagram of Handirch et al.’s Findings] 

Figure 1 summarizes the conclusions of the study, suggesting that all three categories of game innovativeness have an impact on short-term game success, and only game principle innovativeness had an impact on long-term success (Handrich et al. 993-997). 

Presentation Innovativeness

Presentation can visual and auditory aspects that entail music, SFX, and graphics/art. Presentation is most strong for short-term success as it can draw an audience in with palatable artistic choices. In the long-term, this was identified to not have much of an effect, because new games and increasing technological advancements can quickly improve on older designs (Handrich et al. 993-997). For a game like Undertale, its art isn’t crazily innovative, but it does have its unique appeal, which may play a role in its success. 

Game Principle Innovativeness

Game principle involves new ideas revolving around the mechanics of the game. Game principle innovation is strong for both short and long term success– although, more so for short-term success (Handrich et al. 993-997). For many indie games, like Undertale, this is most likely where they must shine in order to become successful. Presentation is resource-intensive. To make a game that is groundbreaking in presentation will either require an exhaustive amount of time from a solo-developer or a large team. For Undertale, I argue that its game principle innovation with the unique concept of agency in either a genocide, neutral, or peaceful run is a main contributor to its rapid success. While Undertale has left a long-lasting legacy and is still vastly played today, its massive success in 2015-2016 can be attributed to its interesting game principles. 

Storyline Innovativeness 

Unlike presentation or game principle innovativeness, storyline innovativeness had a negative impact on success in the short-term. This is most likely due to the fact consumers enjoy familiarity, and having a storyline that drifts too far off of previous work may make consumers less interested or immersed (Handrich et al. 993-997). For Undertale, the story revolves around a split world between the surface world and the underground, where humans and monsters are divided. The playable character falls underground, prompting the objective of escaping back to the surface world. The storyline of the game follows a similar trope of monsters vs. humans and being lost and having to go back home. While there may be some innovation revolving the world-building and settings, the premise of the game’s storyline isn’t far from other stories already existing in movies, books, and other games. Fox’s usage of the pre-existing RPG narrative of monsters and humans interacting provides the audience with familiarity, whilst offering a unique way to interact with the monsters. 


Understanding the business models and techniques deployed within the gaming industry can allow indie game developers to craft a successful game in terms of monetary gain. Profitability is necessary for the continual growth of games, but currently, only a handful of indie games will ever make a profitable margin. Having to compete against corporations with hundreds of employees and multiple teams that can fully utilize the Business Model Canvas leaves indie creators in a difficult position of having to leverage their resources to craft something successful in the market. One of the most popular indie games ever created, Undertale, wasn’t able to complete key activities in the BMC, but was able to leave a lasting impression in gaming history. Undertale was able to excel in value proposition– innovation in games– primarily through its innovation in game principles. Despite its limits in resources, advertising, and presentation innovation, Undertale was able to bring something new to the table that its audience enjoyed. From Undertale, the BMC, and Handirch et al.’s study over game innovation, aspiring indie game developers can learn what not to do and what to do– crucial for the success of a game. 

Firstly, going forward, game designers and developers ought to leverage elements in the BMC to ensure profitability. Indie creators must assess who their customer segments are and how they can craft relationships with them. Additionally, they must be able to balance resource allocation and identify channels for advertising and revenue streams. Ultimately though, value proposition is what allows indie creators to play on the same field as large corporations. Bringing something new to the table in regards to presentation and game principles is what will make or break the success of a game. 


Works Cited

  1. Almér, Erik and Gustav Eriksson. “Understanding the business model in the video game industry.” Jonkoping University, pp. 1-110. Jan 2019,
  2. Granic, Isabela et al. “The Benefits of Playing Video Games.” American Psychologist, Vol. 69, No. 1, pp. 66 –78. Jan 2014, doi: 10.1037/a0034857
  3. Handrich, Franziska et al., “Innovate or game over? Examining effects of product innovativeness on video game success.” Electron Markets, vol. 32, pp. 987–1002. 2022,
  4. Isaac, Chris. “Interview: Undertale Game Creator Toby Fox.” The Mary Sue. 10 Dec. 2015,
  5. Richter, Jon. “Undertale Set Creator Toby Fox Up for Success.” GameRant. 24 Nov. 2021,
  6. Zukowski, Chris. “The Median Indie Game Does Not Earn A Whole Lot” Nov. 2020,

About the author

Frosh studying CS!

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