Shenmue 3 is a canceled (or in an extended pending status) sequel to the Shenmue series. The Shenmue saga is 16 chapters long, and part 3 was to begin at chapter 7 and then going on to a later chapter, which has not been revealed to this day. Shenmue 3 was set to be made for Dreamcast, however, because of its continuing decline in sales as well as its games, plus the losses that Sega had suffered from 1998 to 2001, Sega didn't think that developing the third game was going to be a viable undertaking -- creating a ($70,000,000 ) game for Dreamcast was simply no longer worth the money, time and effort. But what happened was, the developers had already used some of the game's budget to finance the resources and research needed to create future titles of the Shenmue series. As a matter of fact, the story was already done, research for further installments was already done, character design was also done, essentially, everything was ready to be ported for development on all consoles.
In the past, since the second installment, people had been hearing talks that Sega had started development or was to start creating Shenmue 3. But no game was released. No one knows for sure (even industry experts and fans of the game) why Shenmue 3 hasn't been released yet. In 2010, Sega released a statement saying that, despite the huge fan demand, they don't have plans to develop Shenmue 3 yet. The Shenmue series is an open world adventure game for Dreamcast and Xbox. The games were developed by Sega AM2, led by Yu Suzuki, and then Published by Sega.