>How did it derail anything?
How is that not obvious? You completely change the type of game you're making drastically and alienate your main audience.
>It's one of the most popular MMOs of all time
It wasn't at the time. I recall it being initially a failure. It's only been popular again relatively recently as people have rediscovered it due to youtube influencers, etc.
Also, I completely forgot about the Spirits Within. That failure is always cited as being a main reason for the merger.
But I still think, in terms of FF losing its direction, the FF XI and XII era were far more damaging.