Support for the Vita version is ending for good in September. Also on NA it'll only be available on XBox One and PC, though it may be released on other plattforms in the future.
It's not a simple update.
Think of it like this:
PSO2 is Monster Hunter Generations Ultimate.
PSO2 NGS is Monster Hunter World.
NGS is essentially a completely new game, a new story, new graphics engine, fully revamped gameplay, but we'll be able to share our characters between the original PSO2 and NGS, keeping our character's appearance, our cosmetics, and even our equipment (even though that equipment will be completely rebalanced to take into consideration the state of the new game).
Character's levels, skills, the currencies that are not related to microtransactions (meseta and FUN points) and some types of items won't be converted into the new game though, those will start from scratch on NGS.
The best thing, is that the original PSO2 will remain alive (at least for a while) together with NGS and it'll even be updated with the new graphics engine (the gameplay systems will stay the same, and I bet stuff like textures and models won't be updated either, I guess only stuff like lighting, effects and such will be updated). Some of the progress is shared between both games as I said above.
Also, since NGS is a completely new game, most likely it won't have alot of content at launch, and updates will be much slower than the current NA updates, so players will still have the original PSO2 as a distraction until NGS has a more sizable amount of content to play. (Keeping the original PSO2 alive is also nice for JP players who have 8 years of progress that they're not ready to completely leave behind).
TLDR:
Players: Is PSO2 NGS a new game or an update?
SEGA: Yes
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