Yu Suzuki has stated on several occasions that during its early stages, Shenmue was a traditional style RPG based on the characters and storyline of the hugely successful fighting game title Virtua Fighter. The Ryo character was simply Virtua Fighter character Akira to begin with. The final Ryo character has several key differences, but there is a very clear visual resemblance between him and Akira. As the game’s development progressed, the characters became original and the storyline moved away from its Virtua Fighter roots.
As the gaming industry became more aware of Sega’s next generation console towards the end of 1997 and beginning of 1998, Shenmue was also getting noticed. At this time, however, the game was only ever known as Project Berkley. Tech demos from the game were being used by Sega to show what the Dreamcast was capable of producing. Many of these sequences were very well developed, and some were even used in the final retail version of the game. This has led many to believe that Shenmue was probably one of the very first Dreamcast titles to begin production. Shenmue quickly became Sega’s flagship Dreamcast title – representing the systems powerful graphics capabilities and also its ability to render immersive, cinematic characters and settings. – [info from Wikipedia]
Thanks to KEK8 for the contribution!