If you ever stumble across a Dreamcast enthusiast — and believe me, they are everywhere — on the forefront of their diatribe about how great SEGA’s final console was will be a particular game called Shenmue. This 1999 action-adventure title, the most expensive video game ever made at the time ($70 million), became a cult hit for its insane attention to world detail and immersive elements.
Shenmue released to great acclaim and solid sales — 1.2 million — but it didn’t come close to recouping its development costs. Even so, SEGA forged forward with a sequel a couple of years later that came out on the Dreamcast and Xbox. It didn’t sell as well as the first, and with the demise of the Dreamcast, it seemed like any further entries into the series would be unlikely.
Well, it seemed that way to the casual observer, but in truth SEGA continued to be fixated on the idea of making this franchise work. In 2004, the company entered into a partership with JC Entertainment to take the series to the next level. Yes, that was an MMO pun, because that’s exactly where this was all heading.
Martial arts in the ’80s
Apart from the financial loss, you can see why Shenmue might make fertile ground for an MMORPG, especially during an era where online virtual worlds were hot properties. Shenmue already was an incredibly immersive world that only lacked one thing: other players. The initial announcement and trailer back in 2004 had many fans tentatively excited, although they were less-than-impressed with the visuals used in the cheesy CGI trailer.
According to the initial 2004 announcement, Shenmue Online would be set in 1980s Japan, Hong Kong, Korea, and China and feature martial arts action combat. It was meant to be a follow-up to Shenmue II, using many of the same characters and plot threads of that title.
There would be plenty of minigames, as was a staple in the single-player titles, as well as an “auto scene system” that would lend the MMO a more cinematic feel. Real-time fighting, similar to what was seen in Matrix Online, was expected to give the game some juice. Series creator Yu Suzuki was tapped to supervise some of the game’s elements.
“JC Entertainment will operate Shenmue Online’s game services and marketing in Korea, while Sega will hold licensing rights for all other countries,” the original announcement explained. “A license has already been granted to T2 Technology, which will operate Shenmue Online in China.”
Apparently, Shenmue Online’s development began in 2003, with a $25.7 million budget assigned to the project. The original plan was to make most of the game by 2005, test it in Asia, and then roll it out region by region soon thereafter. Obviously, this is not what ended up happening.
“Rumors of a halt in development are completely unfounded”
Development continued through 2005 until JC Entertainment decided that it had enough of the project and the relationship between JCE and SEGA soured. The company pulled out while still owning 50% of the rights to the game, and a tug-o-war with SEGA commenced over the rights over Shenmue Online. “According to the source, Sega and JC Entertainment’s relationship has ended bitterly, as previously reported, and the situation is far from being resolved,” said Gamespot in 2005.
“Reports of a halt in development are completely unfounded,” said Yu Suzuki in November 2005. “We have daily meetings and are currently working hard on the game’s development. Rest assured.”
After a year of legal struggles, SEGA was given full reins to get it done. The company then partnered with an unnamed Taiwanese studio, and by 2006, there was actual evidence that the game was being made. The game resurfaced at ChinaJoy 2006, with a cursory look at Shenmue Online’s classes (which were further divided into multiple specializations), player housing, over 1,000 combat moves, several minigames (pottery making, dice, and darts), and the promise of 150 quests for the upcoming open beta.
Pulling the plug
Ultimately, the development of Shenmue Online didn’t so much end as peter to a gradual halt. Fans started to notice that SEGA wasn’t saying much about it at all by 2007, and by August of that year, it was commonly assumed that it had been quietly cancelled.
The what-could-have-been of this MMO continues to torment Shenmue fans even to this day, especially considering how secretive SEGA was and how little was actually shown of the title. The love for the Shenmue series continued even with no new entry for many years. Xbox’s Phil Spencer got sick of being asked about if there’d be a new game made, and it wasn’t until 2019 that fans got Shenmue III on the PlayStation 4. Unlike Shenmue Online, the third installment was a single-player adventure.
At least one part of this cancelled game lives on, as Shenmue Online’s soundtrack still exists for your enjoyment: