I have written out a list of reasons, pieced together over years of following its development, for why I believe FFXIV was such a massive failure. I will post them here just in case anyone finds it interesting.
1. Square Enix aren't very open with their fans and they don't seem to believe in incorporating player/fan feedback [fact]. (This seems to have changed somewhat within the past couple years.)
2. They are also very conservative and business-like in structure, concerned more about maximizing profit than taking risks [fact]. (This also may or may not have changed, since they decided to throw an enormous team at FFXIV in an attempt to fix it--some say there are 700 people working on it--which was a huge gamble.)
3. They admitted to having very little experience with playing MMOs besides FFXI [fact], and so they had a poor idea of how the genre has evolved [extrapolation].
4. They apparently didn't have a very good idea of what western players wanted [extrapolation], due to their saying stuff like "westerners don't like getting physical objects with their collector's editions" [fact] (which may have come from the fact that western players of XI complained about having to buy physical objects in order to get in-game objects, but that was unrelated to collector's editions).
5. The original director, Nobuaki Komoto, was not experienced with directing an entire MMO from scratch--only expansions (Chains of Promathia, Treasures of Aht Urhgan, and possibly Wings of the Goddess) [fact].
6. The team was broken up into mini-groups, each of which worked on something different [fact], and communication between the teams seemed poor [extrapolation]. For example, the original producer, Hiromichi Tanaka, would make an announcement like "every NPC will be voiced!" only to later correct himself and say "actually, only a few of them will be voiced" [fact]. Seems like pretty clear evidence of poor communication [extrapolation].
7. They seemed to be inspired by Monster Hunter [speculation], which was extremely popular in Japan at the time but not so popular in the west [fact]. It was also an unusual choice of inspiration which most players weren't prepared for, unlike FFXI's main inspiration, EverQuest, which MMO players were already plenty familiar with [fact].
8. They made the decision early on to use a terrible engine which couldn't render lighting and shadows very well or load many players at a time, or really do anything worthwhile [fact].
9. Some of their goals were incompatible with reality, and so they couldn't live up to most of the promises they made [fact]. For example, they wanted to make seamless transitions between zones [fact], but their terrible engine and limited development time [extrapolation] meant that instead they had to make enormous zones that consisted entirely of copy-pasted scenery [fact].
10. FFXI launched in Japan in a pretty terrible state, but by the time it reached the US a year later it was fairly polished [fact]. They seemed to believe that they could pull the same stunt again [extrapolation].
11. The game was pushed out the door long before it was ready, meaning they had no time to incorporate most of the feedback they received from the alpha and beta [fact]. We can't know what was going on behind the scenes, but we do know that Yoichi Wada is a terrible person who only cares about money, and an idiot who seems to think that people will buy anything with the "Final Fantasy" name attached to it [fact, lol].
Another red flag: Nobuo Uematsu said that much of the music he wrote for XIV was stuff he'd written for previous games but was never able to use (evidence of both poor communication and lack of development time).
Additionally, there is a conspiracy theory floating around that much of the development was outsourced to China, due to the presence of apparently Chinese names in the credits. How this may have affected the game's quality is unknown, but Japanese players in particular seem to believe it's a pretty bad sign.
So how have things changed since their decision to remake XIV? Basically, greater transparency and willingness to listen to player feedback (as evidenced by frequent developer posts on the forum and Yoshida's "Letters from the Producer" posts and videos), statements from Yoshida that he has looked to WoW for inspiration, the aforementioned enormous development team, and a brand new engine which has already proven that it can, at the very least, render environment shadows (unlike the old engine).
On the more speculative side there's the fact that they seem to be willing to do whatever it takes to make this game what it should be. Then there are the specific promises they have made about the game, many of which can be found linked at the bottom of this page [http://lodestone.finalfantasyxiv.com/pl/teaser/index.html].
Whether they'll succeed or not remains to be seen. I, personally, don't trust them to live up to their promises, since Square Enix has yet to earn my trust; consequently, I'm taking a "wait and see" approach. I am also a convert to GW2's B2P + friendly cash shop system, and am disappointed that SE is still going with P2P for A Realm Reborn. Also, most of the promises they've made sound like they're planting XIV firmly in the WoW generation and not incorporating newer things like being able to check your mail from anywhere (as just one example).
Regardless, it will be very interesting to see how this all turns out.
