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The game itself needs a bit of update to the storytelling and adjustments to some of the glaring plotholes. Overall though the sky pirate theme is executed excellently. Imagine if there was an expasion into space travelling like in treasure planet!!! Or inter lunar travel in an Arcadia set some hundreds years into the future.
I feel like a series based on this game would be best going the FF route, where you have the same basic ideas and gameplay stuff, with adjustments here and there, but all (or almost all) continuity is dropped between installments.
If you really like the air pirate theme and the art direction, Mega Man Legends is more or less identical, though of course it's an Action-Adventure instead of an RPG.
I've heard it's because it didn't sell very well upon its release.
The likely reason for this is that Sega of Japan (for a variety of very bizarre, and sometimes incomprehensible, reasons) tends to greenlight sequels and/or remakes of games almost exclusively based on what sells well in Japan; with very little concern for what's actually successful (or is likely to be successful) in the West.
Unfortunately, Skies of Arcadia was a flop in Japan (it's basically almost unknown over there these days, with Japanese posters on various sites very often being confused as to what the heck エターナルアルカディア (Eternal Arcadia, the game's Japanese title) even is when it gets brought up in the context of "Top RPGs Ever" polls from over here)
The Dreamcast version sold 74,351 copies.
For context, Dreamcast RPGs (regular or strategy) that sold better than SoA in Japan:
Sakura Taisen 3 - 349,150 Sakura Taisen 4 - 277,983 Phantasy Star Online - 185,364 Grandia 2 - 185,191 (best selling 3rd Party RPG for Dreamcast in Japan) Phantasy Star Online Version 2 - 167,553 Sakura Taisen 2 - 154,837 Sakura Taisen - 152,210 Evolution: The World of Sacred Device - 111,205 Super Robot Wars α - 74,572
The Gamecube version (which sold comparably to the Dreamcast version in the West; with both selling about 200k each from what I recall), in comparison, was not just a flop, but an utterly colossal one over there.
It sold just 7,875 (not a typo; it really did sell less than 10,000) copies.
As such, given Sega of Japan's tendency to use Japanese sales (as well as general clout for a given series over there) as a primary basis for what gets greenlit (and with Sega of America and Sega of Europe being relatively powerless to intervene in such decisions; especially so when it comes to Sega's RPGs), Skies of Arcadia was likely deemed a "failure", and therefore unworthy of devoting time and resources toward porting, remaking, or producing a sequel for it.