This is kind of a weird game to look at on a blog about believability, so this article's going to be a bit more informal than usual. Soul Calibur is a weapon-based fighting game that takes place in the real world, including countries and regions from all over the globe. It's hard to say that Soul Calibur was ever meant to be "realistic", but there was a time that it was meant to be at least a little grounded, and that period has been far exceeded by how cartoonish and over-the-top it is. Still, the few traces of a basis in reality (and how those concepts were either eliminated or marginalized) is worth exploring, at least a little bit.
Soul Calibur centers around two swords, Soul Edge and Soul Calibur. Soul Edge is a sentient sword that cultivates slaughter and death to absorb more souls and grow more powerful, while Soul Calibur is (initially) not sentient, but can be used by the right wielder to defeat Soul Edge. In essence, Soul Edge is the focal point of the setting; without it, Soul Calibur (the series) is just a generic historical fighting game. In gameplay terms it still is, but the story and all the characters are organized around interaction with Soul Edge, either with obtaining it or destroying it.
Soul Calibur takes place during the late 16th century, but includes elements like sorcery, ninjutsu, alchemy, and ancient gods. The combination of things that Soul Calibur gets "right" and that Soul Calibur gets wrong is really just baffling, to be frank; in some areas, they try to show their research, and in others they clearly don't care one way or another, and not just in "well, whatever, there's magic and stuff so they can stretch reality a little" ways either. They just get things wrong, and it's not that they don't do the research or whatever, because they do. They do the research, and then they go out of their way to ignore the more obvious parts.
Let's start with something reasonably believable: the character and background of Siegfried Schtauffen. Siegfried is from the Holy Roman Empire; his father was a knight who fought for the people during the Peasants' War (though the timeline is off by a few decades), and Siegfried idolized him as a hero growing up. However, when Siegfried was a teenager, his father went off to a foreign crusade (although no crusades were going on in real life at the time). Siegfried fell in with a patriotic crowd of teens who decided to attack knights returning from the crusade based on the justification that they were cowards fleeing from battle. I think you can see where this is going: Siegfried accidentally kills his own dad, freaks out, and then hears rumours of Soul Edge being able to restore the dead. Hence, his motivation and his reason for being in the game.
While there are some factual errors present in it, the basic layout of Siegfried's background is fairly reasonable. It's based on things that make sense in the general period, and while it's not 100% realistic, it works all right for what it needs to do. It explains his motivation and background within the limits of the setting. It also ties into his character design; he's German, so he's blonde, and he's a knight's son, which explains his equipment (which we'll touch on later). It uses different elements and ties them together to create a cohesive character, rather than having certain parts just be there because "well whatever we need to say he's from somewhere". The different parts of his design are connected.
Now let's look at Sophitia. No, we're not looking at the ninja, or the zombie pirate, or the the S&M tomb guardian. We're just looking at the Greek woman. You know, from Greece, a region well-known for its olive skin and dark hair and what the heck am I looking at here. The weird thing is that the design team knew that, at the time, Greece was under the control of the Ottoman Empire, and they decided Sophitia was from Athens, and thus incorporated Athena into her backstory (though the idea that the Ancient Greek deities are openly worshiped in 16th-century Greece is equally suspect). But they neglected to include or explain the fact that she doesn't look even remotely Greek. And it's not just her; her husband doesn't look Greek either, so unless there's some little Norse enclave in Athens, it just doesn't make sense.
This brings up the essential paradox of Soul Calibur's design: they could have made it realistic, but they didn't. They could have made it UNrealistic (i.e. "not use real places and just stick it in a generic fantasy mishmash, which they ended up doing for some of the side modes), but they didn't. The fact that they put it in the real world is what opens it up to criticism, because it's objectively and identifiably wrong. They cared about some characters (Mitsurugi, Siegfried, Xianghua, maybe Maxi if you squint a bit), and for other characters they were just like "lol whatever just ignore their background". If you're going to do the research, why wouldn't you use it? It's really just baffling, when you get down to it.
Despite being based around weapon combat, Soul Calibur has always been pretty poor when it comes to actually conveying impact in any other way than "the weapon made contact with the target". People get buffeted around by blows, but there's no sense of damage, either in terms of slashing, piercing, or crushing. What the player sees is basically what happens: the model was physically moved by the force of the attack, nothing more. Similarly, armor doesn't really do anything; some characters wear it and others don't, but everyone takes the same damage and nobody's more or less visibly pained by an attack. Armor is just another form of clothing, and weapons are just sort of blunt clubs at best. It does do weight pretty well, especially with the larger weapons, but the actual "impact" part of the equation just seems underplayed.
There are two main issues to discuss with regards to design: representation of materials and the sensibility of the outfit. Let's start with the first, because the second's going to take a while. Most Soul Calibur outfits never really seemed to be made of cloth, though latex and other artificial materials are far more common. It seems less like outfits and more like superhero costumes or something. As the graphics improved and became more detailed, this became more and more noticeable: none of these characters are wearing anything that looks like it was made by human hands. Of course, they weren't really before either, but you could at least assume that it boiled down to poor textures. Now there's higher-quality textures, and they look shiny and artificial, i.e. "like modern artificial materials".
This isn't totally universal; there's plenty of characters like Raphael or Hilde who have outfits that look more convincing (in terms of the materials used), and the metal bits on every character generally look okay. But for the most part there are a lot of characters and costumes where it's just sort of baffling when one considers what, exactly, the costume is meant to be made of. On the other hand, they do have physical properties - they're smooth or shiny or...latex-y, or whatever you want to call it. It's not exactly "believable" as something that makes sense in the time period, but on the other hand it does actually portray materials, whatever their origin. I mean, I've still got some problems with them (everything's too shiny, for example), but it's not a total loss. In some cases, the simplicity of real weapons (usually a character's non-main weapons) contrasts with the unusual magic weapons, like the organic Soul Edge or the crystalline Soul Calibur. It's inconsistent, but sometimes it works.
Visual Design & Character Design
Soul Calibur doesn't seem to have a lot of decision-making logic; that is, there's not a lot of explanation of why people are wearing what they're wearing, just that they are. The chaste, noble-born alchemist Ivy wears something that can best be described as "implausible", while the modest, pious village girl Sophitia starts out kind of unreasonable and ends up...well, it ain't good, is what I'm saying. Both of those linked pictures track the character's development, with increasing amounts of sexualization. The important thing to note is that neither was believable at the start, but it got noticeably worse over time.
The odd thing is that both Ivy in particular has a history of far more reasonable secondary costumes (SC1, SC2, SC3). These costumes cover more and look a lot more like something that she (as a character) would choose to wear based on their established personality traits, though they're hardly perfect in terms of believability. They're dignified and fit in well with how the character seems to perceive herself. Yet the ones that don't make any sense in any respect other than "made by an artist to look sexy" are, for obvious reasons, the famous ones. But this is more than just an issue of showing some skin, or wearing impractical clothing to a fight (since everyone who's not wearing armor is guilty of that, and that armor doesn't matter anyways). It's an issue of character motivation and perception. Nothing about the clothing makes sense with the character or the time period; it's just the developers playing dress-up to manipulate the players.
Therein lies the problem for believability. Very few of these characters use their costumes as a way to either (a) establish character traits in terms of how the character chooses to dress themselves or (b) say something about the character through the way the costume is designed by the artist. They're there to look sexy, and while this manifests in different ways, it's still pretty much the main driving force. There are exceptions, mostly male. Siegfried is the most immediately reasonable character in terms of what he wears, at least in Soul Calibur 1; he's even got mail underneath the plate armor in the ending illustration. His armor tends to vary in quality in other games, though, and his weapon has always been a big "rule of cool" stick rather than something meant to seem like an actual blade. Raphael's weapon and clothing are emblematic of his status as a nobleman, although he gets a bit more thematically vampiric after his initial appearance (though this at least manifests in larger capes and bat-shaped jewelry, i.e. "things that exist in real life, even at that time"). Mitsurugi's gear is a bit stylized, but it's consistently respectable; even in its "one shoulder pad" ridiculousness, it looks like something a brash warrior would choose to wear.
Even though these characters have distinct visual styles and varying degrees of "do whatever's cool" to their design, they're still designed in such a way that their personalities and background are connected to their appearance. The problem with Ivy's main costumes isn't that it's stupid or sexist (well, those are problems too), but the fact that it says nothing about her character. If it DID say something, it would be something like "she's sexually open", but she's not - she's totally chaste. In the same way, Sophitia's costumes used to make sense in terms of being peasant dress or a warrior-maiden's garb or something possibly stupid like that, but there's really no way to explain her Soul Calibur IV costume other than "the artists know what people are expecting". Characters like Hilde are an attempt to reverse that trend, but it still continues in its own way.
There's a few other male characters I'd like to discuss: Kilik, Maxi, Yun Seong, and Rock. These are dudes who are not fond of shirts. There are some alternate costumes that cover more, but they're clearly willing to flaunt it if they got it. Are these characters called out on being designed for purposes of female fanservice? N-well, maybe by some people, but in most cases "no". Their costumes still seem aesthetically designed to support their concept; Kilik's a warrior-monk, Maxi's a southern-Pacific pirate, Yun Seong's a brash young patriot, and Rock's a barbarian. It seems like a natural part of their character, to the extent that it's not like "whatever, he doesn't like wearing shirts because that's hot". In contrast, most female characters who are more sexualized feel forced into it; it's not a part of their characters or their design, it's just something that's sort of there. Characters like Setsuka and Seung Mina wear sexualized clothing, but it seems like something they'd actually choose to wear for their own reasons (well, depending on the outfit). It says something about their characters, or at least their sense of style.
The point is that "sexualization" and "stylization" are not in themselves bad things, but they should be used to say something about the character. A veteran warrior is going to dress differently than a dapper young noble; a chaste scholar is going to dress differently than a geisha. The clothing says something about them, either in terms of what they choose to wear and why they chose to do so, or how the artist's choices reflect the character's personality. If you're going for the former, it's better to do so in a way that the character can understand (i.e. having clothing that makes sense to the character instead of a magic outfit conjured from the creative aether), but if you're doing the latter, you should actually have the outfit be relevant to the character, instead of throwing on a totally unrelated fetish suit.
Soul Calibur ultimately throws me for a curve because it's not realistic, but it's not totally unrealistic either. There's so many parts where it seems like they're actually trying to do something logical, or at least to have some sort of purpose in the setting and the story, and yet there's so much other stuff where it's just "rule of cool sexy outfit" or "the giant sword bashes the dude into the wall and stuns him briefly". It's not the style that's bad per se (again, it IS bad, though), but it's the fact that the style detracts from ways that things could have been done creatively.
History isn't that boring, guys. People had crazy fashion in real life, it's not just something made up by anime artists. But it still had certain styles to it, and it was still based on materials and techniques that were actually possible to make or use, not just "well here's some latex in 16th century Japan". I'd be okay with unarmored characters as long as the clothing looked like something people would actually choose to wear of their own volition, and while some of the alternate outfits do a better job of that, it's not really the same thing. In a game like Soul Calibur, visual appearance is one of the major defining aspects of a character in terms of expression, and Soul Calibur's developers took that opportunity to say "their characters are irrelevant, here's some tits".
So basically, to sum all this up: pick a reason and stick with it. If you're going to just be like "do what's cool, whatever", then why are you bothering to do research and make SOME of the characters look okay? If you're going to set your game in the 16th century, then why aren't you putting your characters in outfits that make sense (or at least look real in some regard) for the time period? If you're going to give your characters backgrounds and personality, why doesn't their visual design correspond with that? Why? Why did this happen?!?