The team got paid. I've written a lot of software that nobody has ever used. It was fun so I consider it a success.
The question that must be asked here is whether your level of fun should be the best indicator of success. It would seem to me that the entity paying the money should be the one to define the criteria for success, and I think it's quite logical to presume that they would not accept the developer team's level of fun as success criteria for what I hope are self-evident reasons. I believe it would also be self-evident why the entity paying the money should be the one to define the success criteria also. In your case's case, they'd probably say the project was an unfortunate failure and waste of money, but maybe worth the try anyway, so oh well (i.e. we were aware that there were risks, too bad the risks became reality).
For open-source projects, nobody is paying the money usually (as they're usually staffed by volunteers), so of course the developers can define the success criteria in those cases.
The question that must be asked here is whether your level of fun should be the best indicator of success. It would seem to me that the entity paying the money should be the one to define the criteria for success, and I think it's quite logical to presume that they would not accept the developer team's level of fun as success criteria for what I hope are self-evident reasons. I believe it would also be self-evident why the entity paying the money should be the one to define the success criteria also. In your case's case, they'd probably say the project was an unfortunate failure and waste of money, but maybe worth the try anyway, so oh well (i.e. we were aware that there were risks, too bad the risks became reality).
For open-source projects, nobody is paying the money usually (as they're usually staffed by volunteers), so of course the developers can define the success criteria in those cases.