Verified answer

you may need to update directx. download directx from the microsoft website, and install it.

your graphics processor may be too weak, or not be capable of running the directx version required. anno 1404 has a relatively high gfx requirement for ts type of game, and if you do not hava good enough card it will not run at all. make sure the card meets the requirements, then try updating directx

Directx Failed To Initialize

Try to update your DX from either the game DVD or using dxwebsetup.exe online. That fixes most of these issues.

Provided your hardware is good enough of course, anything less than a GeForce 7xxx might not work with that.

Whoops, somebody ninja'd me :P