So SE has officially stated their MMO profits have tanked.

[Jeeqbit]

People being locked inside at home during Covid meant people needed some way to waste time.

That's true, but I want to give you some context here to explain why this decline isn't related to post-Covid.

1. Every expansion has grown by a persistent population of around 200,000 or more, especially since Stormblood. Stormblood likely benefitted from a huge amount of marketing, since the game was still not as mainstream as it could be then.
2. Shadowbringers catapulted it into the mainstream between its epic trailer, a WoW exodus that began in their "BfA" expansion and continued into further expansions due to the disturbing press. To this day, a lot of current players started in Shadowbringers. The gains, however, were relatively consistent with Stormblood's.
3. Covid did not have much impact throughout 2020. There were just the normal patch spikes and that's it.
4. In February/March 2021, the game went viral due to the Blizzard scandal and everyone fleeing to FFXIV, which culminated in Asmongold finally deciding to play. So intense was this gain, that we have yet to surpass it. It was easily the game's peak population. And it had nothing to do with Covid whatsoever.
5. Endwalker maintained gains, often double what we normally get from an expansion release. Up from the 900k in Shadowbringers, we didn't just settle on 1.1 million, we often reached levels of around 1.4 million, due in part that it was the "end of the arc" and over 50% of former players returned at some point or another to see the end of the story (source: % of past players with Endwalker minion on collection sites). But it was obviously in part due to it going viral and Asmongold. By the end of Endwalker, we were long past Covid and could no longer attribute 1.1+ million to Covid.
6. Dawntrail release very nearly reached the peak it did when Asmongold played. It seemed as if the standard expansion gains in Endwalker (of at least 1.1 million) were going to permanently increase to 1.3 million or so, because each expansion usually grows the game that much.
7. That didn't happen. The game has shot down to Shadowbringers levels of around 900k.

And we don't need to say why, do we? Despite all the complaints and pessimism, people returned for Dawntrail, then immediately dropped the population below Endwalker's extremely stable population levels - because people obviously were not happy with the Dawntrail story. And they have struggled with difficulty that is not catered to a wide range of difficulty levels, that SE are trying to solve starting with Pilgrim's Traverse.

You can think of it like a miniature crash.

See, it could be miniature. There is precedent for people returning to an MMORPG. ARR proved this, and so has WoW recently. But it's ultimately contingent on the offer being enticing enough.

FFXIV never did have a massive population. Never. Not until Shadowbringers and Endwalker. What was happening then? Covid.

I agree but for different reasons. The baseline population is really those who started the game in its earliest days. They not only have a greater sunk cost, they also have a greater understanding of the game and of how much infectious passion the developers showed from its earliest days. Clearly, a lot of newer players do not understand that since they weren't around for it, so never developed the same sort of understanding of the developers and thus find it easier to leave. Additionally, the people who joined due to streamers like Asmongold obviously just follow said streamers to the next game they play. The result being a reduced population after the hype wears off, and this is all regardless of Covid.

Even amongst long-time players, while the game was growing, a decline was happening simoultaneously amongst the long-time players, and it began a very long time ago:

• Shadowbringers and to a lesser extent Stormblood alienated some players and made them quit, as they saw the trajectory of jobs very early on and swiftly quit. I saw this plenty among people I'd met in the game at that time.
• Endwalker and to a lesser extent Shadowbringers people began to observe frustrations with battles, which SE are now attempting to solve in Dawntrail. There were people who quit over this, but it wasn't really reflected in the statistics because more people were joining the game than quitting.
• But a lot of players stuck around for one simple reason and that's the story. So once that disappointed them, they were done. That was Dawntrail.