They thought the game wasn't good enough to justify a subscription fee until 1.18 (I think). At that time, they realized that patching the game would not be enough and they needed more funds to rebuild it from the ground, and that's what gave us the Legacy status. So from a marketing standpoint, I'd say it kinda worked.
Personally, I'd say that by 1.18, the game was not that bad, even though the servers were horrible. But at the same time, they already scrapped most of what I think was interesting in 1.x in favor of more streamlined ideas, instead of fixing and improving them.
One thing to remind though, is that a majority of the fanbase was not comfortable with FF being an MMO. At its peek, FF XI had a population of around 500k, pretty "low" considering mainline FF sells far above the million units. And frankly, digging to find the
first updates of FFXI, if the game was released worldwide, it would have probably been destroyed like XIV was.