I just don't buy that the live-service push from Sony had much effect on the fidelity of their single-player output this gen. We had numerous cross-gen titles to start with and statements like the God of War devs saying something to the effect of not wanting PS4 owners to feel like they were missing out (someone correct me if I'm misremembering). Their big single-player studios are still massive with massive headcounts, and we've seen more impressive games this gen from smaller teams and smaller timelines. As for Yotei I always felt Sucker Punch was a second-rate studio, GoT felt pretty budget even back in 2019 compared to its peers.
It's had an effect in that it's significantly reduced their output. What have they actually released that's clearly next gen focused?
Demon's Souls
Ratchet
Horizon FW (yeah, cross gen, but so much effort put into the PS5 version that I think it qualifies)
Returnal
TLOU Part 1
Spider-Man 2
Astro Bot
Death Stranding 2
Ghost of Yotei
9 games in 5 years. Maybe 3 AAA fully next gen ones (SM2, DS2, Yotei), plus Ratchet which is small in scope but AAA in production values. Those are the ones using actual next gen tech built at least partly for the PS5. We've just barely seen anything that really qualifies.
I think you could make a good argument that, really, Wolverine will be the first game released on PS5 by a first party studio that
1. is from one of the studios renowned for their tech and graphics output (ie NOT Saros or Astro Bot)
2. is an original game (ie NOT Demon's Souls, NOT TLOU P1)
3. is made from the ground up for PS5 with a full next gen engine iteration (ie NOT Spider-Man 2 being hamstrung by having to reuse a PS4 map and sticking to that broad level of fidelity, NOT Horizon FW, and probably not DS2 either, given they use an engine that's probably still in development for whatever next gen game Guerrilla eventually pursues)
4. is AAA in scope (ie NOT Ratchet)
That leaves Yotei, and even that's arguable given the size of SP.
The live service push has simply devastated their single player output. I'd bet a lot of money that there's nothing inherently wrong with any of these studios. Wolverine will look incredible, just as Ratchet and Yotei do. Intergalactic will be amazing. So will everything else they release. It's just been an unacceptably long time coming.