I don't understand why there's a weird insistence that taking timed exclusivity is the problem in itself, when the truth is far from that.
The biggest problem with Square is its huge reliance on being the best at bringing spectacle-heavy story-telling to JRPG subgenre (especially true after they divested the western studios), which is a genre that is by definition very long (40 hours is considered short-ish).
Right now the console/PC customers are almost all millenials, who are now cash-rich, but time-poor, this customer base simply cannot find the time to play all the JRPGs that Square launches, and no one just buys games for their backlog, hence under-performance.
Another problem is that Final Fantasy has been far too experimental even in its heyday, almost nothing has been built on, and the fanbase is divided between art styles, story tonalities and battle systems. This is disasterous when your big games cost so much because now you don't have a guaranteed number of day 1 sales. Also note that their home market has largely been dominated by the Nintendo Switch, the weakest dedicated gaming device short of emulator handhelds, this now means that Square can't really extend games like FF7R 1/2 to their home market properly.. If they could then they would have refused the Sony money already.
You look at the success stories in the JRPG subgenre right now (Sega/Atlus and some smaller devs like Falcom and Gust etc), and they all tend to create their games with as much re-usage of assets as possible, while continually iterating on mechanics to keep the fanbase as united and engaged as possible.
If they want to remain with the high-fidelity approach, then Square needs to get equipped properly to be able to deliver the games that have wide appeal in the markets where high-performance consoles thrive (basically focus on the western market entirely like From Software/Capcom are doing), either that or drop the high-def graphics and start pumping out dual releases for Switch/PS to win the JPN market again.