Check this out:
http://www.videogamesblogger.com/2007/08/06/shenmue-online-cancelled-shenmue-3-not-happening-as-segas-franchise-dies.htm

Yes very very bad news indeed, but to be honest im not going to take that news as fact because it is not directly from sega's mouth, its from Kiziko, who have got stuff wrong in the past. I wont believe anything unless its in the form of an official statement from Sega themselves. (same go's for when i see news storys confirming shenmue 3 etc. no point getting any hopes up unless its from sega IMO)

Ren: Fixed Link.

This message was edited by Ren of Heavens(moderator) on Jan 24 2008.

Your link isn't working Anyway, I thought that Shenmue Online was in limbo, but not confirmed as officially dead? Not that limbo is much better..