Slick_JMista: The RE2 remake plays a lot like it with much better graphics and facial animations
The first part of the statement is quite an overstatement, and the second part of that statement is quite an understatement.
Daymare 1998 is in no way whatsoever on par with RE 2 Remake.
And Daymare 1998 has legions of more problems than just the bad graphics and bad facial animations only (which are indeed quite bad).
I.e. Daymare has abysmally bad voice acting, abysmally bad cringe writing, totally non-logical and totally aggravating puzzles (RE 2 Remake also has that problem to some extent, but nowhere near as badly as Daymare does), no biting animations on the zombies (absent animations are different and additional issue on top of the bad animations issue) etc. etc.
Capcom had no reason to shut Daymare down and absolutely nothing to fear from Daymare competing with their RE games.