Shenmue is a hybrid console adventure game initially set in Yokosuka Japan during the late 1980's. This game has a very rich and detailed history as well as story having gone through many release and development cycles. The creator Yu Suzuki intended from the beginning for Shenmue to be a multi part story, however the story was originally intended for release not on the Dreamcast but the Sega Saturn and focused on the character "Akira" from Virtua Fighter not Ryo Hazuki.
The first release would be "Shenmue" in the latter half of the year 200 for the Sega Dreamcast and it became one of the systems flagship titles. The game was exceptionally innovative and pushed multiple boundaries in console gaming at the time. For example the self styled "Magic Weather System" that would randomly generate weather conditions every day within the game including weather changes as the days progressed as well as a full day night cycle. Notably the system also included the option to reproduce the actual weather that took place in the real world during the games chronology. Similar systems can be seen in more modern games such as GTA IV.
The second notable feature, and perhaps most important, was the extreme level of detail used for all characters in the game world. Shenmue was the first console game to ever use full voice acting for every character in the game as well as offering both a Japanese and American language option. In addition every character was fully modeled in 3D with full graphical detail. This has of course become standard practice in most big budget RPG's of today, Mass Effect for example.
Lastly was the QTE, or Quick Time Event, which enabled the player to navigate a long series of events in a pre-scripted scene by properly timing various button presses. This feature unfortunately became rather hit or miss. Many detractors feel it was over used during the course of the game and did not like losing the ability to control the outcome of a situation through creative play or skill. However it did allow the creators of the game to make many intricate movie like scenes as a result that not only helped enhance the presentation of the story but also made for some great viewing. More recent examples of QTE's would be games like Resident Evil 4 or the very recent Ninja Blade.
Shenmue ultimately became one of the most successful games for the Dreamcast selling over one million copies world wide. Reviewers hailed it as both revolutionary, visually stunning, and boasting the most intricately detailed world ever seen on a console at that time. However many also felt the games pace was too slow and that overall the game lacked action and excitement. It also cost around seventy million dollars to produce, expensive by today's standards and unheard of in 2000. Sadly, t was also essentially impossible to recoup that cost through game sales due to the low distribution of the Dreamcast.
Due to the complexity of development, rising costs, and poor sales worldwide of the Dreamcast, Shenmue 2 only saw limited release initially. Ultimately in 2002 as a result of many deals and Microsoft's desire to see greater sales in Asian markets Shenmue 2 was ported to the Xbox and finally saw US release. This game took off where Shenmue ended and features many notable areas of Hong Kong and China such as Kowloon and Guilin as well as similar play style and features.
As of today there are no "official" plans for the release of Shenmue 3 despite the fact that the lion's share of development has already been completed. The spinoff title "Shenmue Online" has also been officially canceled.
Sources: Kikizo Games