Work on Geist (early working title: Fear, changed to avoid legal issues with F.E.A.R., an unrelated video game) officially started in 2002. N-Space learned that Nintendo was interested in backing a first-person shooter/action game with a unique feel to it. N-Space came up with the idea of a game with an invisible man as the protagonist. From there, the concept changed from being an invisible person to being a ghost.
After about eight months of work, n-Space finished the prototype and sent it to Nintendo of America, from which it was sent to NCL. Nintendo latched onto the game, and it was decided n-Space and Nintendo would work closely together on development.
After six months of work, Shigeru Miyamoto suggested the idea of object possession as a game mechanic. Geist was first shown to the public at the E3 2003 and it was later stated that Geist would even be released in that same year. In the months after the E3, both companies realized they “weren’t working on the same game”; N-Space had envisioned Geist to be a first-person shooter while Nintendo (more specifically, Kensuke Tanabe) considered it to be a first-person action-adventure. Geist was present at both E3 2004 and E3 2005 – the separate visions each team had for the game led to many delays until it was finally released in 2005, two years after the initially stated release date.
A lot of gameplay mechanics had changed during development in these two years. From the E3 2003 demo of Geist, it can be concluded that many areas have been redone and placed in a different order. The story also appears to be a bit different. For instance, Bryson is not dying, but simply locked up when you meet him. In an early screenshot we can see a monster that isn’t in the released game. As for gameplay, much more has changed. In the demo, Raimi does not have the violet tinge to his vision when he is not possessing anything, nor does the physical world gets slower. Dispossessed hosts in the demo are unconscious, while in the game they are awake. In the finald game, Raimi looks roughly like an ethereal version of his physical appearance, but in the E3 demo, he’s a far more traditional ghost with a skeletal appearance and no legs.
Also, in the released game, Raimi does not fight other ghosts until the final levels, while they appear to be common enemies in the demo. Two abilities ghost-Raimi possesses in the demo were heavily adjusted. In the demo, Raimi can shoot ethereal blasts in this realm, while he can only do so in the ethereal realm in the released game. The ability to influence objects from a distance through psychokinesis was removed and replaced with the ability to influence objects through possession. [Info from Wikipedia]
There were at least two different HUDs in the beta version.
Thanks to Jay for the english corrections!