I have the same problem in Xbox One X. I was able to play the new update for several minutes, then the game crashed in the end of a battle.
I used to get the error message (server time out) every time I launched the game, but then clicked the retry and that always worked. Now it doesn’t. The download bar doesn’t move and the color circle keeps spininng forever.
I restarted the console. Didn’t work. I tried also other things, like move the game to an external disc, internal disc, deleted and reinstalled it. Nothing worked.
After I read other players saying the exact same thing, it seems there’s a bug in the update that prevents several players from playing the game.
I hope the devs can fix this asap.