"The approach that we're taking is, how do we create a game that Western users are going to enjoy even more than games that are developed in the West?"

So says Capcom's Jun Takeuchi, producer on Resident Evil 5, Onimusha 3 and the original Lost Planet. He's standing in front of an expectant crowd at Captivate 09, a widescreen television looming large behind him. To his left sit four developers, each one staring at a TV of their own, a Xbox 360 controller clasped in a vice-like grip. In about five minutes time Capcom will present a live gameplay demo of Lost Planet 2, showing off the brand new four-player co-op. The heat is on.

The demo begins. A group of steampunk anime-styled characters head towards a jungle swamp on a speedboat of sorts. They reach land, jump out, and speed forward in classic third-person shooter roadie-run style. Wait - what's that? Where's the snow? You know, the white stuff that so defined the original when it was released back in 2007. It's gone. Thawed, in fact. What we're now seeing is lush greenery. Gorgeous, lush, next-generation greenery.

There's a moment of readjustment - it shouldn't be a surprise in any case. Fans of the original might remember that at the end of that game, E.D.N. III, the "Lost Planet", began to thaw. A decade on and terraforming efforts have seen the ice melt, in its place jungles and deserts. The planet is changing, the environment is changing - the game is an obvious social commentary on real world global warming, and we like it.

The graphics are stunning, powered by the latest version of Capcom's MT Framework engine.

And then it hits you: Lost Planet 2 looks absolutely stunning. The graphics are, by a clear margin, the best on show at Capcom's Captivate 09 event. In fact, and this might be a bold claim, Lost Planet 2, even at this early stage, might just be the best-looking Capcom game ever made. The player character models are wonderfully detailed, their spiky armour, outlandish helmets and big guns as captivating as the jungle scenery itself. They shoot pulsing blobs as they make their way through the jungle - boxes with question marks appear as loot. The grass - the grass! It sways in the wind and alters shape as player boots leave their mark. The level of fidelity on offer, the detail of the player characters and the lushness of their surroundings almost lends the game an Unreal Engine 3 feel, sans the shininess. It's all down to the MT Framework engine, Capcom's in-house game engine that's used for "next-gen" development. Lost Planet 2 uses the latest version of it, version 2.0, which in part explains why it looks so good.

New for Lost Planet 2 is four-player coop

As the quartet make mince meat out of the jungle's inhabitants, some interesting gameplay details present themselves. The anchor system from the first game is back - one of the players demonstrates it as he sprays a huge, bipedal monster with weapon fire as his character's feet are firmly planted in the ground. Then something new - he melees the monster's tail with a Gun Sword, a brand new weapon. A monster blows up and sprays fire - our main man is caught in the flames, and rolls around on the ground to douse his helmet and shield. A giant, four-legged monster with a fiery tale acts as an end of level boss. The four players alternate weapon fire with melee hits to bring it down. It dies, the first chapter is over. We've hardly had time to breathe.

Takeuchi then changes tact, and shows off Lost Planet 2's extensive customisation options. In the first game, in true Capcom fashion, you played a pre-determined character, a snow pirate called Wayne. In Lost Planet 2, however, you play a nameless created character that remains persistent throughout both the campaign and multiplayer (which supports up to 16 players). Takeuchi explains: "One of the things about Lost Planet 2 that's different to Capcom's typical games is that there is not the emphasis on story and main character. Of course the story will still be a strong element of the game but what we're going for with Lost Planet 2 is creating a game where you yourself become the hero. You become the main character and you play as one person existing in this world. You might think of it being a little bit similar to the Call of Duty series, where who the main character is is not as important as how the game plays and proceeds."

Remember what Takeuchi was saying about making a game Western gamers are going to enjoy even more than games developed in the West? That's it, right there. Four separate parts of your character are customisable: head, body, backpack and legs. We see dozens of outlandish options, including S&M-esque helmets and guerrilla-type attire. And, yes, you can create a female character - when the option is selected a female model appears on screen, complete with bouncing boobs (this is a Capcom game after all). "You can have maybe a nice sexy girl or a girl who has perhaps rebounded from a diet that's not gone so successfully," Takeuchi says.

Character customisation gives players hundreds of options

It doesn't end there - you can also tweak your character's load-out. The right hand has standard, short and long weapon options (machine guns, shotguns, rocket launchers, lasers, sniper rifles, they're all there) and space for a shield. The left has grenade options: normal, gum, disk, release and support. Then, the icing on the cake, you can add gestures to your character. Everything from super cute Japanese schoolgirl poses to gruff doggy style spank the bum actions is demonstrated. While it's clear that it'll be almost impossible to come into contact with another player who looks exactly like you, Capcom plans to add even more items to the mix via DLC.

Takeuchi then takes us back in-game, and demonstrates a spectacular boss battle against a huge armoured salamander monster with a spiky tail and two long tongues that shoot out of its mouth like laser beams. As the players dodge roll the tongue attacks there's an unmistakeable feeling of epicness - the fight is on a rain soaked cliff, the raging sea from which the beast emerged is a perfect backdrop. The salamander slowly moves its giant body, retreating into the sea before emerging again. Bright orange spikes on its back are obvious weak points - the team mix shooting from a safe distance with firing a grapple hook onto the spikes, hurtling forward and, with feet firmly planted as if abseiling, letting rip in up close and personal style. One player chucks a grenade towards one of its legs - it explodes, taking it clean off. Data Posts, which fans of the original will remember regenerate health, now also act as respawn points. One player jumps into a Vital Suit - one of the robot mechs from the first game - and sprays the monster with mini-gun fire while using a jetpack to leap great distances. VSs will now have special functions and abilities, including transforming into vehicles. Some of them even have room for three players. Another player sticks his shield into the ground and uses it as cover. Thermal Energy, which powers the Vital Suits and determines how much health you have, is once again an important strategic factor, but you can now share it between your teammates. A health bar at the bottom of the screen slowly expires - the salamander collapses with an earthquake-like thump - its flesh melting like a boiling black soup. All that remains is a giant skeleton, and many question mark boxes.

The players stand around the corpse and do victory dances - one claps, another cheers. It all feels very World of Warcraft, actually, or, even Monster Hunter, Capcom's phenomenally successful four-player PSP title. Takeuchi, however, denies using the game as inspiration: "We do get that question a lot, actually. Lost Planet 2 is at its heart a shooting game. So, although it might seem to be similar to Monster Hunter, if you actually play it you'll probably see that it plays very differently. It wasn't that we consciously tried to make it like Monster Hunter as we were developing it. We're just looking for ways to make a four-player cooperative experience more interesting. However, when you do get to play the game, if you enjoy playing through the four-player coop I think you probably will enjoy Monster Hunter as well."

The ice has melted, replaced by lush jungles and deserts

Despite Takeuchi's comments, the Monster Hunter/Phantasy Star feel is unavoidable. It's not simply down to the four-player third-person shooting either. Much of it has to do with the way the game is structured. At the end of every chapter, which will last between 10 and 15 minutes, there's a boss fight, which, once defeated, will drop question mark boxes containing juicy prizes. Then you'll get a results screen detailing each players' rating - once digested it's on to the next chapter. There's no drop-in and out feature, but you will be able to join a party before and after each chapter. Once a chapter is completed you'll be able to play it through again, too. And while your character level and equipment will remain persistent throughout every single mode in the game, offline and online, you'll switch between different groups and locations as you move through the six "interconnected episodes". Yes there will be traditional storytelling cutscenes before and after each one, but the emphasis here is clearly on loot hunting.

One question that remains unanswered is just how tactical the boss battles will be. With no class system in place, it seems that boss fights will require players to coordinate areas of attack rather than play traditional tanking/ranged dps/melee dps roles. The salamander boss fight, for example, allows players to actually get inside the monster and attack from there. One player would shoot the spikes on its back, forcing them to fall down into its digestive system, then the player on the inside can add more damage. "You won't be able to stay inside the enemy forever," Takeuchi explains. "As you can imagine, it's a living creature and living creatures, you know... what they eat also has to come out as well! You'll only be in there for a limited amount of time and you have to try and find a weak point while you're in there. Probably once you are, shall we say... expelled from the enemy, it's probably not going to be something you're going to enjoy."

There are questions surrounding the story, too, which we know little about. Takeuchi describes it as an "omnibus", where in each scenario you play with different characters in different factions in different locales across the planet. Once you get to the final stage everything will come together. In terms of plot, Takeuchi goes into a little detail: "We mentioned that the thermal energy is a very important part of the gameplay, but it's also important to the story. On the planet there are many different groups of snow pirates who are struggling for their own survival. So the game takes place in a world where there is only limited resources, limited thermal energy. One of the important parts of the story will be how people compete for this limited resource. So you can probably imagine a similar thing in the real world with oil. You will see the story take place from many different perspectives, from many different groups, and all of that will be brought to a conclusion in the final chapter."

Lost Planet 2 looks great - we can't wait.

He adds: "Gameplay wise one of the important things is how you cooperate with your teammates, how you do things together and survive together. That's also going to be an important theme in the story - how different groups survive and compete with each other. Particularly if you're in Europe, which has a very rich history of lots of different countries struggling for power and survival, you'll probably see a little bit of that in Lost Planet 2."

Capcom, then, is clearly taking Lost Planet in a brave new direction. It feels as if it's fusing traditional Japanese mechanics seen in the likes of Monster Hunter and Phantasy Star (item hunting, coop gameplay, big bosses) with more traditional Western mechanics (third-person shooting, in-depth character customisation). The result is a game that should, at the very least, broaden Lost Planet's appeal. The first game had some high profile problems: the control system wasn't everyone's cup of tea and repeatedly getting knocked down by enemy fire frustrated many, but at this early stage Capcom has demonstrated a willingness to listen to those complaints, to make Lost Planet, frankly, more fun. And when you add four-player co-op and giant player-crapping salamanders to the mix, well... what can possibly go wrong?

Lost Planet 2 is due out for the Xbox 360 this winter.