The environmental detail was considered unprecedented, with numerous interactive 3D objects, a day-and-night system, variable weather effects, non-player characters with daily schedules and various minigames.

After developing several successful Sega arcade games, including Hang-On (1985), Out Run (1986) and Virtua Fighter (1993), the director, Yu Suzuki, wanted to create a longer experience, and conceived Shenmue as a multi-part epic.

Occasionally, Ryo battles opponents in fighting sequences similar to Sega's Virtua Fighter series; outside of combat, players can practice moves to increase their power.

[9] Ryo receives a daily allowance which can be spent on items including food, raffle tickets, audio cassettes and capsule toys.

[10] In Yokosuka, Japan, 1986, the teenage martial arts student Ryo Hazuki returns to his family dojo to witness a confrontation between his father, Iwao, and a Chinese man, Lan Di.

Lan Di easily incapacitates Ryo, and threatens to kill him unless Iwao gives him a mysterious stone artifact, the dragon mirror.

As he is about to run out of leads, a letter addressed to Ryo's father arrives from a Chinese man, Zhu Yuanda, suggesting he seek the aid of Master Chen, who works at Yokosuka Harbor.

In this version of the story, Akira would overcome his grief following his father's death, travel to China, defeat an antagonist, and begin a journey with a new friend.

Suzuki recruited a screenwriter, a playwright and film directors to write the multi-part story,[11][12] which IGN described as a "revenge epic in the tradition of Chinese cinema".

In 1998, the Sega of America vice president, Bernie Stolar, told Next Generation that Suzuki's next project would "rock the gaming world".

[14] That year, to better market the game as a Dreamcast "killer app", the Virtua Fighter connection was dropped and Suzuki announced the working title Project Berkley.

[27] On June 22, Sega announced a "Shenmue subway tour", showing playable demos at Japanese train stations that August.

[7] Ed Lomas of the UK Official Dreamcast Magazine said the production values were "astounding ... [Shenmue] is the most beautiful game ever made, no doubt about it."

Though he acknowledged problems with controls, dated QTEs, script and voice acting, he felt the experience as a whole was "incredible", particularly its immersion and the freedom to pursue the story at the player's pace.

"[52] Several reviews criticized the invisible walls, abundance of cutscenes, English voice acting, and inability to progress without waiting for scheduled events.

[60] Game Informer criticized the lack of action, writing: "Determining your character's next move requires little more than talking to someone, who will then tell you who to see or where to go ... All that's left is a guy walking around an amazingly detailed environment.

"[21] Peter Moore, the president of Sega of America at the time, said Shenmue sold "extremely well" but could not make a profit due to the Dreamcast's limited installed base.

[68] The Dreamcast engineer and future Sega president Hideki Sato defended Shenmue as an "investment [which] will someday be recouped" because the lessons learnt during development could be applied to other games.

According to McCarthy, while it appears "crude and blocky" compared to modern games, Shenmue "recreated the real world with ... attention to detail that has never been rivaled".

Others left frozen by clumpy interaction with an unthreatening, almost rustic world ... where they'd wander the districts of Yokosuka while asking unusual questions to pensioners and hairdressers.

"[10] In the same year, The Guardian wrote: "[Shenmue's] pacing might be glacial compared to the rollercoaster tempo of Uncharted, but slowing things down allows for a greater appreciation of everything that Suzuki and Sega's AM2 department achieved here ... How everything is held together remains quite exquisite, under the closest scrutiny, even by 2014 standards.

Destructoid's Peter Glagowski wrote that Shenmue had "interesting concepts that are marred by poor execution", and criticized the combat and slow pacing.

"[76] The Escapist critic Ben "Yahtzee" Croshaw disliked the "relentless" and "frenetic" combat, and felt that the open world lacked content between key story moments.

[77] The critic James Stephanie Sterling wrote that "Shenmue is dreadful [...] Maybe at the turn of the millennium when this game was worth a shit it could get away with being bold, but boldness is no excuse for wasting the player's time, having absolutely no respect for the audience or its patience, and generally expecting people to make their own fun in a game that doesn't really give all that many tools to have fun with.

Its large environments, wealth of options and level of detail have been compared to later sandbox games including Grand Theft Auto, Yakuza, Fallout 3, and Deadly Premonition.

[88][89][90][91] Shenmue is also credited for naming and popularizing the quick time event,[10][75] which games including Resident Evil, God of War, and Tomb Raider would incorporate.

[95][96] In 2010, Sega announced another spin-off, Shenmue City, a social game for the Yahoo Mobage mobile service; it was shut down in late 2011.

[98] At the E3 conference on June 15, 2015, he announced a Kickstarter crowdfunding campaign to develop Shenmue III with Ys Net for PlayStation 4 and Windows having licensed the rights from Sega.

[99] On July 17, 2015, Shenmue III became the fastest-funded and highest-funded video game project in Kickstarter history, raising $6.3 million in total.

[105] The ports were developed by the British studio D3T,[106] and include new graphics and control options, improved user interfaces, and Japanese and English voices.