During QTE (Quick Time Event) sequences, a button will flash on screen briefly and the player must press the relevant button or combination of buttons to trigger Ryo's actions. Fights against opponents can take place in QTE form as frequently as in Free Fight form. In addition to battles, QTE sequences are used for various other scenarios. For example, at one point a QTE sequence is used when Ryo must chase an escaping crook and Lan Di associate who has stolen money from him. The sequence takes place in the middle of a busy town centre, and a variety of incoming obstructions must be avoided. As the game progresses, the reaction speeds required of the player become quicker and the button combinations become more complex. The player's success or failure in these scenes can affect the flow of gameplay as well as the current cutscene. The QTE concept is not new to Shenmue, however. The earliest known example of the QTE, is the gameplay of the original Dragon's Lair, released in 1983. While not referred to as a QTE (that term having been coined by SEGA), in principle it was the same thing, and can be seen as its origin. There is also an earlier example of a SEGA game featuring prominent use of the QTE, 1996's Die Hard Arcade.
Storyline text from Wikipedia.org