While Shenmue Dreamcast is considered a work of art in its own right, its sales have not followed.It did not have the expected commercial success. Let's not forget that the franchise had a production cost of around 40 - 70 million dollars, one of the most expensive games in the world at its time.
The bosses of the studios affiliated with Sega would meet once a month to talk about their games and the improvements to be made on the development kit. Shenmue was frowned upon internally because of his colossal budget, they nicknamed him "Shame Mue", jealousy of AM2 ?
Contrary to popular belief, the Us version of Shenmue 2 was not canceled due to the Xbox version, Microsoft did not purchase the exclusivity. Sega of America felt it was simply too late to release it.
Sega Europe took the risk of publishing it. We were on the verge of cancellation on European and American territory. Without this SOE decision, Shenmue 2 would have stayed in Japan and would never have had a classic Xbox version.
Microsoft was interested because most of the localization work was already done, a recycling of the canceled Us DC version !!!
Source: A former Sega of America employee
My other articles about cancelled games : Planet of the Apes (dreamcast) - Shenmue 2 Us (dreamcast) - Stampede (dreamcast) - Dee Dee Planet Dreamcast - Riders (concept) - One Online for PC and Flame Busters Xbox Classic