IIRC, the Siggraph pictures was to demonstrate Square's new SGI hardware and programming.
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Remember, FF7 was originally planned for the N64 DD. Nintendo knew that catridges were the biggest limiting factor on their new system. In fact, they had originally been considering a CD add-on for the SNES (much like the Sega-CD). They contracted Sony to research and plan for the DD (Disc Drive) to be intergrated into the 64. At the last moment, Nintendo decided not to ship it with the 64, fearing the steep price would lose customers (i.e. the Sega Master, Saturn systems). Sony then redesigned the DD to be an add-on, sold seperately, but still owned by Nintendo.
However, as the deadline approached to begin manufacturing the DD, Nintendo discovered a surprising fact.. they owned the entire cartridge market. In fact, internal resources suggested that if the DD caught-on 'too' early, Nintendo stood to lose a lot of money and jobs. This would have been a huge 'loss of face' for the executives at the company and their partners. Therefor, at the last minute, during a news conference that was originally planned to introduce the DD, Nintendo instead announced that they were redesigning the DD.. with Phillips (who had just went through the spectular failure of the CDi ).
Sony, and a lot of software developers who were looking forward to the high-storage/low-cost solution of the DD (including Square), were caught completely off guard. Sony in general and the head of the DD project, Ken Kutaragi, felt betrayed by Nintendo's surprise move. Sony was set to dump the whole project, but Kutaragi said he had plans for a stand-alone CD console system that could compete head-to-head with Nintendo's system. Plans were finalized in a short 6-months, and production began. The 'PlayStation' went on to completely dwarf the N64.
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Sakaguchi-san at Square had big plans, and a big story, planned for the N64 DD and the next Final Fantasy. However, when Nintendo announced that it was 'delaying' the DD, Square was caught with their pants down. Aproximattely 1/3rd of the game had been developed, and it was already much too big to ever fit on a cartidge. While Square was reassessing if they could "shrink" the game to fit on a cartridge, Sony called and sold Square on the benefits (not too mention the increased profits..) of the PlayStation business model and hardware. Square was supplied with an early developement kit, and Square began porting all their previous work to the PlayStation format.
Square was delighted, as the PlayStation offered many technical advantages over the N64. Besides the 'seemingly' unlimited data strorage offered by CDs, the PlayStation offered higher-resolution graphics, in 3D; High-quality steaming sound (RedBook); and the ability to stream pre-rendered video straight from the CD. Square exploited a lot of these abilities to better tell their story.
FF7 was released to an eager fan-base in 1997, went on to become one of the best selling PSX and Square titles.
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BTW, I actually purchased FF3 US (FF VI, JP)cartridge for the SNES when it first came out in 1993. It retailed for $59.99 US.
In 1997, FF7 , with 4 CDs, started retailing for $49.99 US. A subsequent release dropped to $39.99, and eventually it became a 'Greatest Hits' title, for $19.99.
