Presumably this was recorded in 2001/2002 as he mentions Grand Theft Auto just having been released.
What's being omitted here is that the game they were originally planning wasn't System Shock 2, but a game about a kidnapping on a space station. Only later were they approached by EA, asking if they didn't want to use the System Shock IP, to which they happily agreed of course, all being huge fans of the original game.

(video via neutralx.com)