I enjoyed it when I saw it for the first time in the cinema (I was 13 at the time), even if I wasn't all that impressed with it. I suppose it did poorly because of a number of factors:
1) The voice acting was mediocre. In CGI films, voice acting is absolutely crucial. They hired some big name actors to do the voices... all without realizing that regular actors, while capable of acting in person, on screen, don't make the best voice actors. A regular actor can convey their character through movement and facial expressions and good actors use that - a lot of acting really is about moving in exactly the right way, posing in the right way and practising facial movements - if you take that away from a regular actor and force them to rely on their voice alone, they don't do a terrible job, but they don't do a good job. The voice acting really is pretty mediocre. Alec Baldwin in particular didn't do a very good job at all.
2) The CGI was uncanny valley-ish. Don't get me wrong, it was extremely impressive for its time. But hell, there's video games with better graphics and CGI right now that still don't look realistic.
3) The plot and the writing weren't really all that memorable. Alien ghosts? Really? The villains aren't properly characterized, the characters aren't memorable in any way, and a lot of the middle of the film was entirely forgettable.
4) It was extremely expensive to make. Quite a few people went to see it on the strength of the CGI alone, but it wasn't enough for them to recoup the incredible costs.
5) It really had nothing to do with Final Fantasy. At all. Calling it Final Fantasy enraged hard-core fans who went to see it and might have deterred a few people who didn't want to see a film they assumed would be based on a video game.
I heard the film did pretty well in Japan, but not anywhere else. Again, I stress, when I saw it, I was entertained and I felt I got my money's worth but I knew even then that the film would never be considered a classic or even decent by most people. It's a shame because they really did have some incredibly interesting designs and cool CGI sequences... but you can't depend on that stuff alone.
