Sales on Xbox just need to be big enough to cover the cost of porting, they don't need to be close to PS or Switch sales (this applies to all SE games, not just FF16).
Switch 2 should be a big opportunity for SE, let's see if they take advantage of that.
By that logic, why would the Switch sales need to be any bigger than Xbox's? That would also be a port; the effort SE'd have to do to get the game running well on Series S would cost at least as much (probably actually more) than porting it to the Switch 2 (at this point a "Switch" port would probably just be Switch 2).
Much like SIE's PC ports tho I assume there's an amount attributed to multiple platform deployments baked into the original budget acting as the "foundational costs" of the other ports. Which we wouldn't learn about, since that type of granularity is not important to customers or to shareholders.
I feel like, look... Hogwarts Legacy on freakin' Switch exists. It looks and runs like absolutely dogshit. Let's be honest. And look, I love Nintendo, I dearly love my Switch. But I would never buy that game on Switch unless I had no other choice and had to play it. I'm greatly enjoying it playing through it currently, in beautiful 4K on my Series X at solid 30 FPS and almost zero loading.
What is my point, why am I saying all this? Look, if they can port Hogwarts Legacy down to Switch, they can port FFXVI down to Series S. They could probably do it and at least lock in 720p at bare minimum, 30 FPS, with minimal graphical downgrades. It's the super-high resolution modes that demand all that overhead and compute power.
In theory, you're right that compromises for a Series S version could definitely be done. But would it make business sense? Would the costs in time, manpower and money to optimize the game for Series S justify the amount of people that'd actually
play the game on a Series S?
Hogwarts on Switch is one thing; Harry Potter is a super-mainstream IP and the Switch has 140+ million units out there. A AAA Harry Potter game, even if it's the shittiest version, is still going to move quite a few millions which is exactly what Hogwarts did on the Switch. Final Fantasy is a way more niche IP, and Series S is sitting well under 20 million install base out there (assuming Series is at 26.something million right now, I'd figure it's something like 16 million Series S/10 million Series X type of split).
What's more, the type of people who'd be into playing FF XVI that also have an Xbox, would probably have a Series X to play that type of game on. So I don't think the business proposition for a Series S version makes much sense.
Hence,
if XVI even comes to Xbox, I can see SE getting an exemption to skip Series S or get way lower QA clearance for a Series S version (that way they waste as little time and resources on that version as possible). Even if there is a Series S build, I can see SE getting the OK to put out a Series X version first, then release an S version some months later. By which point there'd probably be no point.
Maybe someone who only has access to a Series S?
NGL I'd feel pretty sorry for them. Especially if they're anything other than a casual gamer.
Like I've got family members in the young teens who ditched their Series S the moment they got a PS5. Probably don't even know where their Series S is, likely lost somewhere in the room under a ton of old clothes.