It's easy to forget how amazing it was in 1999.
Let's look at some 1998 releases on PSone/N64 and PC. These were some of the better looking games on their respected systems.
N64
PC
PSone
Now you also have to remember we went from Final Fantasy VI to Final Fantasy VII and Link to the Past to Ocarina of time so back then the jumps were massive. It was very hard to imagine any game having graphics like Myst without pre-rendered backgrounds.
Even PC where Half Life was a great looking game then for the first and to my memory but maybe wrong was the first tie a console had something better looking and even then for the first time with Soul Calibur looked better than the Arcade version. A first ever.
So we these those samples and jump to Shenmue
Now of course we think more powerful hardware better visuals. It was not just the horsepower of DC alone showing muscle. It was also something then that was more rare and now taken for granted. Detail. We are of course well versed on the detail it has. Ryo and his hands and jacket to the environments and everything in them. NPC's even had an absurd amount of detail. Take the old lady at the beginning.. she is seen for what 2 minutes in the entire game?
So while yes now she looks well in a sense ironically old. Visuals not aged well and look old. Then for an NPC esp one on for such a small amount of time is pretty impressive. She has as much detail as the NPCs you see daily and she does not appear again in the game. Now of course voice work for 500 characters and 500 NPC is another topics how impressive this was.
The careful detail to his face and hair and soft shadows and from what I remember even his lip movement was pretty impressive. I pick him as to me always stood out as the best looking on Dobuita street. I know that now we have the tech where this guy could be in the bleacher section of Madden and have as much detail.
The jump was so large that back then people thought the screenshots were CG. They had to clarify it here in this Magazine article that this is real time and not CG.(in fact in another article from a different mag had to do the same for Sonic Adventure,so much so they went into great detail how to tell the difference)
To me the only thing that has really aged in this game is some texture work but the game would still look amazing in HD case in point
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Now of course the game was very impressive in many other ways. I think now in hindsight with the details games use today,it's one of those things you look back sand say..wait this was 1999..bullshit they didn't have that back then.I do believe all the detail and careful work done holds up pretty well 14 years later.