Shenmue 2 and Phantasy Star Announced for Xbox as US Dreamcast Shenmue 2 is Cancelled

On the opening day of the Tokyo Game Show, Sega has announced that it has cancelled production of the US Dreamcast version of Shenmue 2, releasing the game for Xbox instead.

Another massive blow for US Dreamcast owners, Sega has stated that it has given exclusive rights for the game to Microsoft and will not be pursuing a Dreamcast release in the territory.

Also announced was Phantasy Star for Xbox. Though tentatively titled at this point in time, the new game is likely to be along similar lines to the GameCube game from Sega’s Sonic Team.

There has been no mention as to whether or not the two games will receive cross-platform support enabling owners of each console to interact with each other. Also unknown at this point is how the recently announced PC version will fit into the equation. Will Microsoft lever the PC and Xbox games against the GameCube?

"This agreement with Microsoft will give Shenmue 2 and Phantasy Star Online the marketing prominence and increased awareness that the titles deserve, while giving Sega access to significant incremental revenue as we work toward profitability goals for this fiscal year and onward," said Peter Moore, President and COO, Sega of America. "We expect that both titles will be ‘killer apps’ on Xbox and that the technical capabilities of the platform will surely bring both games to new levels in terms of graphics and experience."

"Sega is known for making some of the best games in the business and ‘Shenmue’ and ‘Phantasy Star Online’ are truly some of the best titles the industry has to offer," said Robbie Bach, Chief Xbox Officer (CXO) for Microsoft. "We are fully committed to working with Sega and Yu Suzuki’s team to ensure that Shenmue 2 takes advantage of all that Xbox has to offer, to deliver gamers an even more revolutionary game than the first."

More as we get it.