Recently, the service innovation is getting interests among innovation researchers. After reviewing the Lancasterian approach concerning the service innovation, this paper explains concretely the innovation in the cultural industry, specifically online game industry, using Lancasterian approach. Combining Lancasterian approach and the value chains in the cultural industry systematically, we draw both implications in theory and policy. Theoretically, the innovation in the cultural industry needs interdisciplinary research due to the inclusion of diverse innovation natures-technical, content, and marketing innovation. Also this paper suggests policy makers to apply research and development(R&D) concept in the manufacturing sector to the cultural industry in which content R&D means the creation of new concepts or new development of the service.