Shenmue failed for a number of reasons. I’d argue it was too awesome for normal people, but others insist it was slow-going, chock full of stupid “That day it rained…” plot, and ultimately boring. The Shenmue games also cost huge amounts of money to develop – many reports approximated a cost of $20 million (Wikipedia simultaneously claims $20 and $70 million) and the first game in the series was supposedly entered into the Guinness Book of World Records for being the most expensive game that had been yet been produced.
Sega would presumably allow development of Shenmue 3 if it weren’t such a huge risk. A costly game that sells poorly is never an attractive prospect to accountants. Deciding the MMO format may make them a profit, Sega has dashed hopes of Shenmue 3. → Theme Postital