Daikatana was meant to be what John Romero originally wanted Quake to be. Daikatana was largely inspired by Chrono Trigger and The Legend of Zelda: Ocarina of Time. The influence of Chrono Trigger is evident in the time travel aspect of the game, and the GBC port of Daikatana was a Legend of Zelda-esque top down game. Romero wanted Quake to be a first-person action-RPG with a time travel theme, but the rest of id Software wanted it to be a sci-fi gothic FPS. In the end, it was none of the above, and was instead a fairly standard shooter with much the same imagery as Doom, just with primitive polygonal graphics instead of sprites. After some major arguments against the team at id, Romero was fired from the company and later formed Ion Storm (along with long-time pal Tom Hall).From very early on in the game's development, Daikatana was aggressively advertised as the brainchild of John Romero, even going so far as to make the games cover say "John Romero's Daikatana". At the time he was famous for his work at id Software in the development of Wolfenstein 3-D, Doom and Quake, as well as his exceptional deathmatching skills, and level design. Time magazine gave Romero and Daikatana glowing coverage, saying "Everything that game designer John Romero touches turns to gore and gold." One infamous early advertisement for Daikatana, created by marketer Mike Wilson and (begrudgingly) approved by Romero, who later apoligized for the ad, was a red poster with large black lettering proclaiming "John Romero's about to make you his bitch", a reference to Romero's signature trash talk during gaming, particularly during deathmatching and DOOM lans at conventions. Nothing else was featured on this poster but a small tag-line reading "Suck It Down," an Ion Storm logo and an Eidos logo. The advertisements tarnished the company's image, and Romero's as well.
Romero originally completed his design concept for Daikatana in March of 1997. The design document that he had come up with called for a large amount of content. Included in this document were details for 24 levels, 12 weapons and 64 different types of monsters. Despite this utterly huge undertaking Romero remained convinced that development for the game could somehow be completed within the frame of 7 months, in time for Christmas '97.
Romero's growing company Ion Storm had licensed the already-established Quake engine to power the game. id software had completed content development for the much less ambitious Quake in the frame of 6 months with 9 artists. John Romero figured that given these numbers , he could complete the same amount of work on Daikatana in the period of seven months with eight artists. John Carmack at id Software, was quoted in a June 1997 issue of TIME magazine as saying that there was "no chance" Romero would finish a game with 35 weapons and 64 monsters by Christmas 1997. Not surprisingly, he turned out to be right.
The truth of the matter was that Romero didn't have enough of an established, experienced team to handle the project. At the time that all of this was going on, Ion Storm was still being built as a company, hiring in new staff, many of which were only mod makers and not experienced game designers/ programmers. Ion Storm first showed Daikatana at E3 1997, and the game was still running in software mode, which made it look underwhelming at the time. Romero went to see the id Software booth and was stunned by Quake II's dynamic colored lighting, and believed there was no way Daikatana could compete against Quake II's hardware acceleration. He decided to license the new Quake II engine to stay ahead of the competition, but there was one problem: id's contract specifically stipulated that a licensee couldn't use the new engine until id's game was released in December 1997, the same time Daikatana was scheduled to release. The switch forced Ion Storm to scrap eleven months worth of development.
Romero was confident that the game engine switch would reach the March 1998 deadline (only three months after the previous deadline!) but little did he know it was not that easy. In fact, his staff was against the switch and hated the decision. Romero seemed to have no idea how much work it was going to take just to implement the bare essentials of his four-hundred-page Daikatana design document. Eidos was displeased with Ion Storm's slow progress and the executives were worried that the company were spending millions of Eidos's money lightly. Compounding the belief that Romero was passive in his involvement was the perception that he wasn't working as hard as he could on Daikatana. It all started with John Carmack's comment to TIME magazine in 1997 that "after [Romero] got rich and famous, the push to work just wasn't there anymore." The online community also picked up on this theme, and before long Romero was depicted as a playboy with little interest in doing more than deathmatching all day long.
Romero denied the claim that his heart wasn't in Daikatana, saying, "I'm here more than anyone in this company, period. Eidos is here every day and they know how hard I work." Besides Eidos, Tim Schafer, the designer of Grim Fandango and Psychonauts, said that Romero definitely did care about making a good game. According to Schafer, there was only one thing to say about Romero's interest in his game: "The dude cares."
Tensions began to arise between Romero and his staff and he fired a few of them one by one. In November 1998, eight members of the Daikatana team left Ion Storm in frustration and formed their own company: Third Law Interactive (originally Bloodshot Entertainment). In January 1999, Daikatana's basecode completed its switch to the Quake II engine. The switch had been scheduled to only take weeks, instead taking an entire year. Although plans had been made to have the game done by February 1999, they missed their deadline and were forced to push the game back still further. A demo of the game was released, but it underwhelmed many players due to the fact that it only included multiplayer death match, something that has ironically been lost on modern developers, who frequently put out multiplayer-only demos for no apparent reason. Ion Storm tried to make up for the demo's disappointment by making a more impressive singleplayer demo for that year's E3.
Unfortunately, last-minute changes to the game's code and other issues had the game running at a less-than-impressive 12 frames per second. At this time Eidos became fed up with the project, given that it had funded the game for $25 million at that point. In June, 1999 Ion Storm and Eidos came to an agreement which resulted in Eidos receiving majority ownership of the company. In August, 1999, Daikatana's lead programmer Steve Ash left the company and Shawn Green (ex-id Software member) was his replacement.
Daikatana was officially and finally released on April 14th, 2000, and after all the anticipation, excitement, and hype the game built over the years, Daikatana received overwhelmingly negative reviews. GameTrailers.com named Daikatana as the second most disappointing game of the decade, surpassed only by the MMORPG Star Wars: Galaxies.