In feudal Japan, two rival clans, Ebihara and Mishima, are at war. Mishima goes to swordmaster Usagi Miyamoto to craft a weapon to end the conflict: the Daikatana. However, Usagi realizes Mishima's dark desires and gives the Daikatana to Ebihara; Inshiro Ebihara throws the sword into a volcano at the end of the war.
In 2455 AD, swordmaster Hiro Miyamoto is visited by a man named Dr. Toshiro Ebihara, a descendant of Inshiro who is suffering from a plague and about to die. Toshiro tells Hiro that Kage Mishima, the ruler of the planet, took over the world by stealing the Daikatana and using it to alter history. In 2030, he stole the cure to a viral plague and uses the cure to control the world's population. Mikiko Ebihara (Toshiro's daughter) has been captured while trying to steal back the Daikatana, and Hiro must rescue her and fix history.
Hiro storms Mishima's headquarters where he rescues Mikiko as well as Superfly Johnson (Mishima's head of security) who rebelled when he grew sick of Mishima's brutal totalitarian practices. Mikiko and Superfly join Hiro in his quest and steal the Daikatana. Mishima encounters the trio as they steal the sword, wielding a second Daikatana. Mishima sends the trio back in time to Ancient Greece. Hiro and Mikiko defeat Medusa, recharging the Daikatana as it absorbs Medusa's power. The three time jump once more, only to encounter Mishima again and be sent through time to the Dark Ages, stranded as the Daikatana has run out of energy.
The group finds a sorcerer named Musilde who offers to recharge the Daikatana if Hiro, Superfly, and Mikiko can save his village from the black plague. To do this, the group must defeat the necromancer Nharre, reassemble a holy sword called the Purifier, and use it to restore King Gharroth's sanity so that he may use the sword to end the plague. When King Gharroth recharges the Daikatana, Hiro and his allies time jump again to the year 2030. San Francisco has fallen to gangs and martial law has been declared by the military and Mishima.
The trio fights their way through a naval base where the Mishima is working on weapons. The ghost of Usagi enters Hiro's body and gives him full control over the Daikatana. With Usagi's knowledge and sword skills, Hiro slays Mishima. One of the Daikatana disappears, as its timeline no longer exists.
Mikiko steals the remaining Daikatana and kills Superfly, revealing that the feudal Ebihara clan was just as evil as the Mishima clan. She announces her intentions to use the Daikatana to restore the honor of her ancient clan and take over the world. Hiro defeats and kills Mikiko, then uses the Daikatana to fix history once and for all. The altered timeline concludes: the Daikatana is never found in 2455, the viral plague is cured in 2030, the Mishima clan never takes over the world, and Hiro exiles himself to a forgotten corner of the space-time continuum, safeguarding the Daikatana to ensure that it never falls into evil hands.
The aim was for the company to create games that catered to their creative tastes without excessive publisher interference, which had constrained both Romero and Hall too much in the past. Daikatana was part of an initial three-game contract made between Ion Storm and expanding publisher Eidos Interactive; and the third title to be conceived at Ion Storm after Anachronox and what would become Dominion: Storm Over Gift 3. Ion Storm received a $13 million advance from Eidos. The game had a rumored budget of $30 million.
The core concept was to do something different with shooter mechanics several times within the same game. Romero created the basic storyline, and named its protagonist Hiro Miyamoto in honour of Japanese game designer Shigeru Miyamoto. The title is written in Japanese kanji, translating roughly to "big sword". The name comes from an item in a Dungeons & Dragons campaign played by the original members of id Software, which Romero co-founded. During this early period, the team consisted of fifteen people. The music was composed by a team which included Will Loconto. Christian Divine created the character Superfly Johnson, originally named Super Williams in honor of Super Fly and Jim Kelly's character from Enter the Dragon. He was originally of French descent with "his name taken from the few cultural documents left in the apocalyptic future" and his "character arc would be finding out his real identity at the end".
Something that further impacted production was the departure of around twenty staff members from the team, who either left Ion Storm or transferred to the Austin studio. In 1998, lead artist Bryan Pritchard left the company and was replaced by Eric Smith. According to Divine, the growing negative press surrounding the company had a further detrimental effect on development. Some of the backlash eventually led to his own departure for Ion Storm's Austin studio to work on Deus Ex. Almost the entire team working on Daikatana left to join Gathering of Developers by 1999. The most notorious incident was the public resignation of nine core team members at once, something Romero understood given the low team morale but felt as a betrayal of trust. The departures led to the hiring of Stevie Case as level designer and Chris Perna to polish and add to character models. 17 people, one-fifth of Ion Storm's employees, left in early 1999, and Corrinne Yu, director of technology, left for 3D Realms. Only two staff members remained on the game for the entirety of its production.
Problems reached the point that Eidos publishing director John Kavanagh was sent down to sort out problems surrounding its production. In a later interview, Romero admitted there were many faults with the game at release, blaming the development culture and management clashes at Ion Storm, in addition to staff departures causing much of the work to be scrapped and begun over again. Divine attributed the problems to a combination of overly carefree atmosphere, and corporate struggles about company ownership interfering with game production. In a 1999 interview, Romero attributed the slowing of development during that period to the staff departures, but said that most of the level design and the entire score had been completed before that. Wired listed the game 5th on the list of vaporware for 1999. A sequel, using the Unreal Engine 1, was considered.
In 2010, Romero said that despite its shaky development and being considered one of the worst games of all time, Daikatana was "more fun to make than Quake" due to the lack of creative interference.
Upon request, Romero sent the complete source code for version 1.2 of the game to Sapone. However, the hard drive that was sent corrupted. After shelving it for five years, Sapone successfully compiled the source code. After this, Sapone enlisted the help of other modders to help work on the patch. Reportedly, by playing multiplayer matches of the game, it has helped Sapone find bugs and test the code's stability. In 2014, the first version of the patch was released. It is currently under active development.
The project aims to fix various issues the game was criticized for and make general improvements:
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