Franchise Festival #105: Shenmue

Welcome back to Franchise Festival, a fortnightly column where we explore and discuss noteworthy video game series from the last four decades. Older entries can be found in the archive here.

This week we’ll be carefully inspecting Shenmue. Cover art is from MobyGames. Please consider supporting that website, as its staff tirelessly catalogs key information and art assets for an often ephemeral medium.


At Sega AM2, Yu Suzuki got his start designing punchy arcade experiences like Hang-On (1985) and Space Harrier (1985) before pioneering the nascent world of 3D graphics with Virtua Fighter (1993). His position as project lead on the development of Sega’s popular Model 1, Model 2, and Model 3 arcade boards made him the natural choice when the studio decided to discontinue its failed Saturn console and move on to a new platform in the late 1990s. Unfortunately, Suzuki’s experience with the Dreamcast and his pivotal role as the man behind its most famous piece of software would be the undoing of his career at Sega.

Shenmue (1999)

A 2014 Game Developers Conference (GDC) presentation on Shenmue revealed much of the project’s complicated history. Suzuki and his team began prototyping an open-world role-playing game (RPG) for the Saturn called The Old Man and the Peach Tree during the mid-1990s, settling on Virtua Fighter’s Akira as their protagonist once they started to build the world using that game’s one-on-one fighting engine as a foundation. The final game’s narrative arc took shape during this phase of development as writers from various disciplines, including film and stage, contributed to an eleven-chapter script depicting the hero’s path from Japan to China in pursuit of his father’s killer.

A handful of alternate titles, including Tale of the Mysterious Wind, were considered during Shenmue‘s Sega Saturn phase. Source: Kaneda Saturn

Virtua Fighter RPG: Akira’s Story shifted platforms to Sega’s upcoming Dreamcast console in 1997 and was renamed Shenmue: Chapter 1: Yokosuka in 1998. Akira was replaced with an original character named Ryo once Suzuki, the primary architect behind the Dreamcast’s cutting-edge arcade-style hardware, decided to have his team create an entirely new game engine from scratch. Suzuki likewise replaced the project’s core themes – “fight,” “sadness,” and “starting afresh” – with three new keywords: “leisurely,” “fully,” and “gently.” While it would retain a combat system, Shenmue was increasingly being geared toward life simulation elements rather than traditional RPG mechanics; every non-player character (NPC) would have their own daily routine while changing weather patterns would reflect the actual meteorological conditions of the game’s real-world 1986 setting.

The streets of Yokosuka are full of life and period-appropriate architecture. Source: MobyGames

Their ambition rapidly threatening to outstrip their reach, Suzuki’s team expanded to a nearly unprecedented 300 people using paper to plan out development in the absence of any purpose-built management tools. Much of 1999 was spent identifying extensive bugs in Shenmue’s vast city of Yokosuka and rearranging in-game characters and objects. The project had gone spectacularly over budget, becoming known as the most expensive game ever made, and occupied 20 times more disk space than initially planned before compression and cuts were carefully applied. Despite these hurdles, Shenmue would be hailed as a breathtakingly beautiful and complex piece of art when it was published in Japan on December 29, 1999 and in North America on November 8, 2000. 

Though its voiceovers leave much to be desired, Shenmue‘s in-engine cutscenes are highly expressive. Source: MobyGames

The presentation was immediately arresting at the turn of the century and, thanks to a high-definition remaster released on PlayStation 4, Xbox One, and Windows PCs in 2018, remains impressive twenty years later. Ryo has access to an open city rich in period-appropriate detail, including hundreds of uniquely NPCs milling about Yokosuka and experiencing their own short stories. Even building interiors were crafted by an architect on the AM2 team rather than being assembled from cut-and-paste assets in an effort to inspire nostalgia in the player. Extensive cutscenes were motion-captured using a small team of dedicated actors. A fraught localization process inexplicably performed internally at Sega of Japan rather than being produced in coordination with IMages, the English-language company contracted to handle voiceovers, was less successful at producing a corresponding level of audio naturalism.

Ryo can play faithfully emulated versions of Space Harrier and Hang-On at Yokosuka’s You Arcade. Source: Shenmue Wiki

Shenmue’s relatively simple plot depends entirely on player curiosity to progress over its 20-hour playtime. The story opens with the murder of Ryo’s father, martial arts master Iwao, by a sinister man named Lan Di; Lan Di quickly escapes to Hong Kong after stealing Iwao’s mysterious mirror and Ryo sets out on a quest to defeat his father’s killer. While the goal seems straightforward, it articulates as a meandering effort to accumulate funds and investigate Lan Di’s identity by inspecting objects and having conversations with Yokosuka residents. The lack of clear objectives can be vexing, especially if the player lacks a strategy guide, but is a key part of Shenmue’s appeal.

Ryo’s climactic battle with Lan Di lieutenant Chai is more cinematic thanks to its use of QTEs. These had existed at least as far back as Capcom’s Sweet Home (1989), but Shenmue brought them to a wider audience than ever. Source: Shenmue Channel

Aside from its persistent open world, Suzuki’s magnum opus is noteworthy for its pioneering use of quick-time events (QTEs). These sequences, in which the player must tap an on-screen button prompt in order to execute a context-specific action, appear during cinematic moments in the story. Combat sometimes plays out using real-time brawler commands that reflect the project’s Virtua Fighter influences, but just as often hinges on QTEs to deliver more heavily-scripted action than would be possible using traditional controls. This design technique would influence an entire generation of games, including Resident Evil 4 (2005) and God of War (2005).

The notorious forklift minigame, seen here in Shenmue‘s 2018 HD remaster, would take on an outsized role as a symbol of the game’s dedication to life simulation mechanics. Source: Super Eyepatch Wolf

Shenmue’s positive contemporary reception and 1,200,000 copies sold were not enough to save the Dreamcast. Sony revealed the PlayStation 2 days after the Dreamcast’s North American launch, promising more impressive graphics than could be produced on rival platforms and reminding players of the PlayStation’s comparatively strong third-party support. Sega hardware sales dried up overnight following the PlayStation 2’s March 2000 release. Though the Dreamcast’s discontinuation on March 31, 2001 signaled Sega’s retreat from the home console market and represented a serious professional setback for Suzuki, Shenmue would persist.

Shenmue II (2001)

Shenmue II was largely finished during the later stages of its predecessor’s development. This likely influenced Sega’s decision not to cancel the game in spite of Shenmue failing to break even on its unprecedented $70,000,000 budget, though a handful of concessions were made to the studio’s financial realities. A planned interstitial chapter set aboard the Genpuumaru, the boat on which Ryo sailed for China at the end of Shenmue, was axed alongside other scenes even after motion-capture work was completed. A Dreamcast version served as something of a bittersweet swan song for the platform in Japan and Europe, while American fans would receive the game exclusively on Microsoft’s new Xbox hardware on October 28, 2002 following an efficient eight month localization process; this port lacked the Dreamcast version’s ability to carry forward save data from Shenmue but included minor visual enhancements, a movie covering the events of the first game, and a short manga depicting the abandoned boat sequence.

Shenmue II includes the ability to select responses or ask questions during conversation sequences. Source: World of Longplays

Shenmue II’s plot begins with Ryo’s arrival at Hong Kong in early 1987. Ryo’s quest for vengeance takes him through the famous Kowloon Walled City in pursuit of Yuandu Zhu, a martial arts master with knowledge of the personal history between Lan Di and Iwao, and eventually to the mainland Chinese city of Guilin. He is aided in Hong Kong by Ren and Joy, respectively a street gang leader and traveling motorcyclist, and in Guilin by a young woman named Shenhua Ling. Ryo eventually learns that Lan Di stole his father’s mirror as part of a grand plot to resurrect the Qing Dynasty in China.

Free battles are de-emphasized in favor of more complex QTEs, but some fights – like this one with Yellow Heads gang leader Dou Niu – still require the player to engage in traditional one-on-one fighting mechanics. Source: Shenmue Wiki

In spite of Shenmue II’s scope being three to four times larger than that of Shenmue, its gameplay includes numerous refinements. The in-game clock can now be sped up to accommodate meeting NPCs during their scheduled routines and the story can often be progressed by chatting with more than one individual. NPCs are generally friendlier to Ryo than they had been in Shenmue, while battle sequences are more polished and frequent; QTEs are even expanded to include branching outcomes and the requirement of multiple button-presses. The final third of the game, on the other hand, boldly eschews combat in favor of meditative conversations and exploration in Guilin. Owing to lessons learned during the prior game’s development, the series’ extraordinary level of environmental detail was not compromised by Shenmue II’s tighter timeline and budget.

Capsule collecting makes its triumphant return, allowing the player to acquire randomly-selected toys of characters from other Sega games using vending machines. Source: Shenmue Wiki

Critical praise did not translate to strong sales, however, and the game performed abysmally outside of Japan. AM2 was reassigned to focus on arcade games and Suzuki was quietly pushed into the background by Sega executives. A decade of toiling away on canceled projects like Psy-Phi and even an abandoned Shenmue massively-multiplayer online role-playing game (MMORPG) disillusioned the down-on-his-luck auteur, so he founded an independent studio called Ys Net and formally retired from Sega in 2011.

Shenmue III (2019)

Shenmue II’s poor commercial reception and the series’ subsequent disappearance from the spotlight did little to dim audience enthusiasm for a continuation of Ryo’s unfinished adventure. In the early 2010s, one high-profile fan successfully reached out to Yu Suzuki via PlayStation designer Mark Cerny with a plan for funding Shenmue III: Ryan Payton – creative director of Halo 4 (2012) and founder of Seattle-based game studio Camouflaj – convinced Suzuki to pursue a crowdfunded Kickstarter campaign that soon received a major boost from Suzuki’s on-stage appearance at Sony’s E3 2015 press conference. 60,000 backers funded the $6,000,000 project almost overnight in the internet’s fastest-growing crowdfunding campaign. Sega licensed the Shenmue property to Ys Net, many of the original game’s developers reunited under Suzuki’s leadership, and Shenmue III was released for the PlayStation 4 in November 2019.

Bailu is much more rural than the locations of previous series entries. Source: MobyGames

Ignoring the passage of 18 real-world years, the game’s story resumes only moments after the cliffhanger that had ended Shenmue II. Ryo and Shenhua seek Shenhua’s missing father through the rural Bailu Village and then the city of Niaowu; unlike locations from earlier titles, Shenmue III’s setting is entirely fictitious. Following Shenhua’s kidnapping by the Red Snakes gang, Ryo is joined by Hong Kong ally Ren as the two invade Niaowu’s ancient castle in pursuit of Lan Di. The game’s ending seemingly concludes Ryo’s quest for vengeance but introduces Lan Di’s fellow cartel leader Niao Sun as a new antagonist. In a contemporary interview with the PlayStation Blog, Suzuki explained that “rushing to tie up the plot here would have made for a flat game.”

It wouldn’t be Shenmue without a host of wacky minigames, like this turtle race. Source: MobyGames

Fans were understandably frustrated with the lack of closure to a story that had been left unfinished nearly two decades earlier, but Shenmue III’s mechanics would prove even more divisive. Suzuki, who confessed to playing few games in the time between the release of Shenmue II and Shenmue III, made only limited changes to a formula that had already begun to show its age in 2001. Pacing is exceptionally slow and cutscenes frequently interrupt daily activities in the interest of verisimilitude. The plot is still primarily progressed by talking to NPCs who go about their routines, while objects can only be added to Ryo’s inventory by slowly picking them up and inspecting them individually.

Skill books grant new combat techniques. Source: MobyGames

More controversial than the lack of evolution from the series’ roots are a handful of updates designed to heighten realism and make the game more approachable to newcomers. In a nod to life simulations like Harvest Moon/Story of Seasons, Ryo’s ability to explore his surroundings is now governed by a stamina gauge replenished by eating or resting. This doubles as a health bar, however, resulting in battles being more or less challenging depending on the time of day and access to food. Combat is likewise simplified from earlier titles, hinging more closely on enhancing Ryo’s stats through traditional RPG grinding than the execution of well-timed attacks.

New antagonist Niao Sun is a bit more flamboyant than the quietly deadly Lan Di. Source: Shenmue Wiki

Shenmue III debuted to a mixed critical reception and lower sales than publisher Deep Silver had anticipated. Even as some longtime fans celebrated the sequel’s faithfulness to its source material, others lamented that Suzuki had failed to deliver an adequate resolution to a story they had been waiting on for decades. With the series’ future again in doubt, aside from an upcoming anime adaptation, it’s hard not to feel that one of the medium’s greatest potential comeback stories had been squandered.

Note: Cover image sourced from the Shenmue Wiki

Spinoffs and Canceled Games

As fans held out hope for a third series entry during the 2000s, Sega offered a glimmer of hope in the form of Shenmue Online. This MMORPG began development under Korea’s JC Entertainment in 2003 with plans for an open beta in China and Korea in 2005. Players would create an avatar and explore Japan, Korea, China, Macau, and Hong Kong while interacting with characters from other Shenmue titles and joining one of three gangs; an “Auto Scene System” would mix narrative cutscenes with gameplay to retain the storytelling flavor of the series’ single-player adventures.

Shenmue Online would have given players their first opportunity to interact with the series’ universe using a female avatar. Source: Shenmue Wiki

Unfortunately, the relationship between Sega and JC Entertainment rapidly deteriorated and the latter abandoned Shenmue Online in Spring 2005. Subsequent efforts to continue development internally at Sega produced a lengthy preview video that debuted at the China Joy 2006 convention but were similarly unsuccessful. Though the studio has never officially announced its cancellation, no news about Shenmue Online has circulated since 2007.

I could find no screenshots of Shenmue City, which sadly seems to be lost. Please accept this image from a promotional event for the game instead. Source: Shenmue Fans

A little-known social game called Shenmue City was also made available for Japanese mobile phones in December 2010 through DeNA’s Yahoo! Mobage service. Inspired by Zynga’s browser-based Mafia Wars (2009), Shenmue City was developed by Ys Net and published by Sunsoft with an eye to attracting new series fans without a massive budget. Low production costs and limited system resources would not hamper Suzuki’s ambitions, as the game featured fully 3D graphics and an explorable world in which the player could enjoy a retelling of Shenmue’s events and engage in the numerous minigames for which the series was known; adaptations of Space Harrier and Hang-On are even available at in-game arcades! As with most other Shenmue games, however, the project failed to live up to its publisher’s hopes and it was discontinued after only a year of service in December 2011.


Shenmue is a fascinating disaster. Sega’s willingness to throw an irresponsible amount of money at Yu Suzuki was a bold gambit, resulting in a hugely influential open-world game that couldn’t possibly recoup its development costs or single-handedly save a faltering hardware line. Suzuki was punished for his role in this financial catastrophe with years of irrelevance at a company that he had once helped make famous before Sega once again took a chance on Shenmue by licensing it out to their erstwhile auteur’s independent studio. Unfortunately, wild ambition once more produced a game that fell short of expectations. Perhaps it would be best to let the franchise’s reputation live on as a pivotal cult classic that can’t be modernized without compromising what made it so important in 1999.

What do you think about Shenmue? Which is your favorite series entry? How could it be modernized without losing its identity? Did you back Shenmue III on Kickstarter? Let’s discuss in the comments below.

You can find me here at The Avocado or on Twitter as @SinginBrakeman. Be sure to tune into the monthly Franchise Festival podcast if you’d like to hear an even more granular exploration of noteworthy video game series; Season 2 Episode 1: Resident Evil is now available!

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As ever, here is a tentative list of upcoming articles:

  • #106: Spider-Man (Part 1) – August 6
  • #107: Spider-Man (Part 2) – August 20
  • #108: Advance Wars – September 3
  • #109: Monster Hunter – September 17
  • #110: Luigi’s Mansion – October 1