Shenmue’s Road to Release (Shenmue "Complete Guide" Feature, March 2000)

Not long after the release of Shenmue ~Chapter One: Yokosuka~, the Shenmue Complete Guide, with its distinctive black cover, was published in Japan by SoftBank under the Dreamcast Magazine brand. Included in this guide was a special in-depth feature that looked back on the game’s ambitious development.

In this post, we will be translating the full piece into English. It's a fascinating glimpse into how Yu Suzuki and his AM2 team transformed an experimental RPG prototype into what would become one of the most groundbreaking titles in gaming history.

The translation begins below.

A Year and a Half Following Shenmue

AM2, Sega’s most powerful development team, has produced countless hit games. But around the end of 1996, its head, Yu Suzuki, began to go quiet. Spurred by a shift in direction within Sega, Suzuki took on the RPG genre for the first time. As he became more and more immersed in his new project, before anyone realized it, it had grown into a massive undertaking involving an extraordinary number of staff members.

What would become Shenmue ultimately took over four years to complete. But the Shenmue you hold in your hands is still just the beginning.

What exactly is Shenmue? We take a closer look to find out.

Why Did AM2 Develop Shenmue?

Known by its palm tree logo, AM2 earned a reputation as Sega's most powerful development team, a seal of quality for exciting, innovative games. Its global breakthrough came with Virtua Fighter, and even now, the name remains one of Sega's flagship brands.

Following Sega's internal restructuring in May 1999, AM2 was officially renamed the Second Software R&D Department. Despite the name change, the team continued to be widely known by its legacy name, SEGA-AM2. And with Sega's transition toward a holding company structure, it seemed likely the group would soon take on yet another name - and perhaps even become its own company.

As one of the industry's leading development groups, AM2 reached its peak between late 1995 and early 1996. Back in 1992, though Sega had initially lagged behind Namco, it pulled ahead by launching the arcade industry’s first full-scale CG board: the MODEL 1. This hardware laid the foundation for a series of Sega hits, starting with Yu Suzuki’s Virtua Racing. The game rendered 180,000 polygons per second in real time, presenting players with visuals that felt truly futuristic. It was Sega's first major hit in years, and it shook the gaming world.

Virtua Racing (arcade)

At the time, Suzuki had become frustrated with the constraints of pixel art and traditional 2D graphics. But once he got his hands on real-time CG hardware, he took to it like a fish to water, producing hit after hit.

"With 3D CG, we could do entirely new things for the next five years."
- Whether Suzuki actually said that is uncertain, but the sentiment clearly guided him.

From 2D to 3D: The Industry Evolves

Suzuki understood firsthand that translating traditional 2D games into 3D CG experiences would allow games to evolve into something entirely new. Players felt the same.

In late 1994, the Sega Saturn and Sony PlayStation were released, two so-called “next-generation” consoles that would go on to lead the industry. During that period, Sega and AM2, under Suzuki’s leadership, released hit after hit: Daytona USA, Virtua Cop, Virtua Striker, Fighting Vipers, and of course the Virtua Fighter series, which captivated players across Japan.

Daytona USA (arcade)

Other divisions were producing hits too: AM3 with Virtual-On, and AM1 with Get Bass (Sega Bass Fishing). Sega was firing on all cylinders, earning its reputation as a powerhouse in the industry.

Even for me, working on Dreamcast Magazine - which evolved from Sega Saturn Magazine - the years from 1995 to 1996 stand out as the most exciting and thrilling times. You can still feel that heat and passion radiating from the old magazine pages today.

To draw a comparison, AM2 at that time was like a team of famous mountain climbers - scaling one peak after another. Watching them ascend ever higher was not only thrilling and easy to follow, but also inspiring to anyone who saw it.

At the premiere event in Yokohama, the team revealed not just Shenmue itself, but how the project had taken shape. What they showed was so advanced that even the developers found themselves wondering, “Is this really even a game?” It was the result of an extraordinary and ongoing accumulation of technical innovations.

A New Peak in Sight

But when the treasure of real-time 3D CG appeared on the horizon, they weren't the only ones to chase it - every other team set off after it too.

The "gold rush" - or perhaps "age of discovery" - that began with the Saturn and PlayStation didn't last long. Within just a few years, the unexplored frontiers had been picked clean. It was as if the dream had vanished overnight.

And the game industry today? Perhaps it resembles Japan itself, once hailed as the fabled "Golden Land of Zipangu" (an old European name for Japan), now a shadow of that former promise.

Suzuki’s Choice

So, what choice did AM2 make at that time? Yu Suzuki made his decision:

"This time, let’s go searching for legendary treasure."

I personally believe that’s what the development process of Shenmue must have felt like. And the moment of that decision may have been triggered by the year-end sales season of 1995.

At the time, Sega was porting its biggest arcade hits to the Saturn. In its first year, the console shipped over 2 million units, far more than the number of Dreamcasts in circulation today. Some even said the console war with PlayStation had already been won.

But just two months later, everything changed. Square announced Final Fantasy VII for the PlayStation.

Final Fantasy VII (PlayStation, 1997)

From that point, the tide shifted dramatically.

The Turning Point

There’s no need to go over the full history that followed. But one thing is certain: that moment had a major impact on Yu Suzuki.

“If RPGs are what determine the fate of a console, then I’ll make one myself.”

That decision would go on to dramatically alter AM2’s direction.

"I personally can't wait to play the Hong Kong chapter," says Yu Suzuki. As Shenmue expands into a large-scale project for AM2, it is likely to remain a central focus for the team.

What Future Does Yu Suzuki See? What Role Will Shenmue Play?

The real Shenmue lies in the Hong Kong chapter!

At some point in 1996, the project began to take shape. Or more accurately, it seems the planning had already started in 1995. However, it hadn't yet become a full-scale endeavor.

When we talk about 1996, much of the focus - for both Yu Suzuki and the gaming industry - was on the completion of Virtua Fighter 3.

More than a year after the success of Virtua Fighter 2, the third entry was unveiled in February at the AOU Show, with a jaw-dropping demonstration running on the new MODEL 3 arcade board, stirring up a massive reaction all across Japan. Following a difficult development, Virtua Fighter 3 was finally completed in September of that same year.

Virtua Fighter 3 (arcade, 1996)

Then, some time later, AM2’s RPG project, whose foundational research had been progressing in parallel for about a year, began full-scale development.

A New Kind of RPG

The earliest concept was something along the lines of: "Can we create an RPG where everything is playable in real-time 3D CG, using motion capture technology?" Naturally, this was also a sort of counterstatement from AM2 to the Final Fantasy series, which was built around cinematic pre-rendered cutscenes.

For Yu Suzuki, the idea of using CG never had anything to do with pre-rendered movies. His focus was always fixed on real-time CG.

He believed that only through real-time CG could they realize a completely new form of gameplay - one that delivered the thrill of freedom and a sense of the future. 

The label “FREE” (Full Reactive Eyes Entertainment), used to describe Shenmue, was the embodiment of that vision.

Ren, who is set to appear in the sequel. Whether he's a friend or foe to Ryo is still unclear, but he's sure to be a character who captures players' hearts.

A Long March Toward a Vision

The RPG project that had begun development on the Sega Saturn was, at the time, given a provisional title different from what we now know as Shenmue*. But the deeper the team dove into development, the more it became a project with no clear end in sight. The end of 1996... the end of 1997... time passed by almost unnoticed.

*Note from Switch: the project started off as "Virtua Fighter RPG".

According to retrospective accounts from the developers, during that time they even considered creating the game using a system that repurposed a special booster module for the Sega Saturn. Eventually, though, the shape of Sega's next-generation console, the Dreamcast, began to come into view.

What had begun as Yu Suzuki’s first attempt at making an RPG, under the banner of “Let’s go searching for legendary treasure,” became an extreme expedition. No matter how elite the team, a journey so long and uncertain was bound to cause some to lose their way.

However, that long and uncertain journey finally began to show a glimmer of light with the arrival of the Dreamcast.

Poster promoting the Dreamcast console

A Grand Unveiling

At the end of 1998, Sega held a grand production unveiling in Yokohama - the Shenmue Premiere. The overwhelming visuals that had been crafted up to that point astonished and moved many, raising expectations even higher. Nearly four years had been spent on that massive undertaking. That’s how enormous the Shenmue project truly was.

It had taken nearly four years to reach that point. Shenmue was, without question, a massive undertaking.

In Shenmue II (working title), one of the key locations will be the massive Kowloon Walled City, known as Asia's "City of Darkness," towering atop a hill. An even more expansive world awaits!

The Price of a Dream

With the arrival of real-time 3D CG, a new world of gaming opened up. Though that world vanished in just a few short years, AM2 - at the forefront of the industry - never turned its eyes to small treasures lying by the roadside. Instead, they set off in search of a legendary treasure no one had ever seen before.

Whether that decision was the right one… the final verdict is still unknown. But one thing is clear: to bring to life a dream that no one has ever realized before requires both intense passion and a heavy price. Like a space shuttle launch, it demands vast effort, precise coordination, and enormous cost. And anyone striving to achieve something truly great must pass through that kind of trial.

Now Shenmue Chapter 1 is in Your Hands...

This genre-defying "FREE" title - did it resonate with you?

Judging from the fact that it was awarded Best Overall Title in the 1st Dreamcast Magazine Grand Prix, hosted by Dreamcast Magazine, and earned the top rating among all Dreamcast titles, it's fair to say that many users gave it high marks.

However, the true form of Shenmue lies beyond this installment, Chapter One: Yokosuka, and in the upcoming sequel, tentatively titled Shenmue II. Originally, the Yokosuka chapter was meant to be a short prologue, with the Hong Kong chapter serving as the main stage of Shenmue.

But due to the state of development and timing of the release, Shenmue launched with only its first chapter. That’s why characters like Ren and the heroine Shenhua - who were intended to play major roles from the beginning - had only their presence hinted at in this first installment. Those who attended the five-city Premiere events across Japan no doubt carried those expectations with them.

The Shenmue Premiere in Yokohama (Dec 1998)

Shenmue ~Chapter One: Yokosuka~ presented possibilities; the anticipation for a new kind of game.

A Message from Yu Suzuki

In a recent interview with Dreamcast Magazine, Yu Suzuki said:

“If Chapter 1 was the challenge, then Chapter 2 will be the payoff. I think it’ll make the form and style of Shenmue much easier to understand.”

If Shenmue ~Chapter One: Yokosuka~ caught your interest in any way, I hope you’ll look forward to the sequel.

This topic was selected by the Phantom River Stone blog patrons via our monthly poll on the Phantom River Stone Patreon and was available for early access. Thank you to everyone for your support!

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