I think framing it as being "out of touch" is odd and even the wrong way to look at it, frankly, because
Shenmue isn't a series that had previously reflected contemporary trends. You could say that the whole "F.R.E.E." system was part of a drive to make something "open world"… but
Shenmue I's approach is completely different from what
GTA would popularize, as well as the games retroactively seen as forerunners (
Zelda 64,
Mario 64 and other collect-a-thon platformers). The closest comparison I see is to adventure games, and those were in terminal decline in the late 90s!
So
Shenmue I and
II were always off in their own little worlds, doing their own thing. To me, it's that very aspect that made them unique and special, and that made them continue to resonate with me years later— there was nothing else quite like it, so devoted to the mundane (in a good way!) aspects of simulation.
Shenmue III is offside from current trends, but it's not so much that it's "outdated" so much as it's continuing to follow its own path and evolution. I wouldn't have it any other way.
Or, in short:
Yes (And That's a Good Thing)
(That said,
III isn't
completely iconoclastic; the stamina gauge, kung-fu levels and especially the new combat system all feel very much informed by modern games. I don't think they're really
successful "modernizations", but they show that Suzuki and the other developers have at least cast a glance at what video games are doing today. But I think there's a limit as to how much the series can lift from modern games while still keeping its own character.)