He died, in the stormy ocean.
To understand the film, you need to realize that one of its aesthetic pillars, like with many of Kitano's other films, is the concept of "mono no aware". While this is notoriously difficult to describe or translate, it is essentially an aesthetic concept that refers to the transient beauty of things, with an implication of sadness.
A common example would be the blooming of sakura (cherry blossoms). Their beauty does not lie merely in their visual qualities, but also in the fact that the blossoms only last for a short while. The sadness of their rapidly approaching "death" adds to their appeal, and has often been used as a symbol for human mortality.
In a sense, you could say that in "Scene at the Sea", you watched the blossoming of his life, as well as its end. This blossoming, however, is not the kind of "grandiosity" you often see in American film. Rather, it is a normal life filled with numerous small struggles and fleeting tragedies - but also true happiness.
Of course, the film could have had a different ending. But that would have detracted, in a way, from the transient beauty of the summer shown in the film.
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