Devil May Cry began its development life as a Resident Evil 4 title for PS2, after the completion of Resident Evil 2, under the direction of Hideki Kamiya and “Team Little Devil”. Early research and development work included a trip to Spain, to examine various castles as a basis for the game’s environments. However, in prototype status, the game proved to be a radical departure from the established Resident Evil formula and the survival horror genre in general. Rather than abandon the project entirely, the premise was changed and the game eventually became Devil May Cry. Some of the major gameplay elements were partially inspired by a bug found in Onimusha: Warlords. During a test-play, Kamiya discovered that enemies could be kept in the air by slashing them repeatedly, which lead to the inclusion of juggles by gunfire and sword strikes in Devil May Cry.
According to Kamiya, Devil May Cry was designed from the ground up around Dante’s acrobatics and combat abilities. The decision was made late in the development process to change the game to a more mission-based advancement, instead of the more open-ended structure of the Resident Evil games. [Info from Wikipedia]
In an interview with Kamiya from 1UP, we can read more about the Resident Evil / Devil May Cry evolution (it seems that he mixed up RE3 and Re4.. or was DMC in development already after RE2?):
Devil May Cry originally started out as Resident Evil 3, but it turned into DMC because it was so different, and we lost a year of development time. So I thought maybe I was screwing things up and that Capcom wanted to fire me, which would explain why I couldn’t do DMC2, because the news came as such a surprise to me.
The video contains an early version of the game with some noticeable differences. The textures for the background, the enemies and Dante are way less-detailed from the final game. Also instead of Phantom (the giant spider boss that is in the final game), in this footage there is an eagle-like creature.
Thanks to destructor1890 for the contribution!
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