The moral of the story is to read the market correctly and deliver what your audience is asking for and expects. Reading the market isn't easy, it's almost like divination, but avoiding obvious mistakes is the bare minimum you can do if you want to succeed. Or you could just blame Fortnite for everything going wrong
If there is one thing I learned during these last years, is that a lot of developers and publishers though of themselves as a golden goose. You don't need to read the market if you are the one who decides the market. How many times I read a post mortem where studio heads said "yes this game's development was a disaster but we are [DEV NAME] so we will pull it off in the end"? Let's look at your FFVII example: Square most likely believed FFVII was such a sure thing that the userbase would simply buy whatever console/platform had the exclusive rights without asking questions, and Sony and Epic probably though the same. FFVII is supposed to be a Golden Goose after all, so the remake project was, without a doubt, a golden egg. It doesn't matter where it's released, or how much it costs, users will flock to it
Well we know how that ended. But the same could be said of many other companies. The truth is that golden gooses don't exist. Every company is a normal goose that may be able to come out with a golden egg, but because they are a normal goose there is always the chance the next egg will simply be a silver one, or a bronze one, or a straight up normal egg. It's not even limited to games either
There is also another issue that I think it's very common: I think many big teams are convinced they are the only ones that can actually provide a specific product, and so they believe the market will always be there regardless of what they produce because the users have no other choice. They will buy our games, or they have nothing else to buy
Bioware and Bethesda are perfect examples. There is nothing like a Bioware rpg, there is nothing like a Bethesda open world. When Dragon Age Origins came out it was a unique experience: something inspired by old school cRPGs but with a "modern" presentation. Later games were less like cRPGs, but the presentation was still there. Same for Mass Effect. Both series had a level of presentation (graphics, voice acting, cinematic feel) that is only possible with the backing of a massive publisher. It doesn't matter who made the choice to make the sequels "more action, less rpg" because in the end it didn't matter saleswise, because no one else should be able to create a game that not only is similar to DA:O gameplay wise, but also features the same level of presentation. Yes, there was a resurgence of cRPGs when Kickstarter came to be, but no matter how good Pathfinder was, the "presentation" was much simplier. Even Mass Effect Andromeda had no problem selling 5 million copies
But in the end a golden egg appeared out of nowhere. BG3 "followed up" DA:O in both gameplay and presentation, it outshined anything Bioware was developing at that time, and Veilguard is the obvious result. Comparisons between BG3 and Veilguard are everywhere, and users now have an alternative, they can chose to not buy Bioware rpgs because another company produced something on the same level, if not above
Bethesda is the same. In the years after Fallout 4 (but even after Skyrim) more and more competitors appeared. You no longer need BGS to have a big openworld RPG you can approach how you want, and Bethesda is absolutely feeling the pressure after Starfield. The truth is customers will try to find something better, and eventually a dev team will provide that experience they seek. And with longer development times the fear the next egg is not going to be golden can be terrifying