Its all about burn-rate. If you have a big team, a bunch of contractors, and a multi-year project schedule you're tens, even hundreds of millions, in the hole before seeing a penny back on that investment. Budgets and balance sheets are constantly being monitored, as are fluctuations in the general state of the market, making it a constant battle to justify the sticking with the plan.
Its the root of pretty much every problem in publishing; the bigger the bet, the more they have to try and hedge by pandering to DEI, shaving off quirks and interesting ideas to appease the casuals, excessive monetization implementations, content streamlining for marketing purposes etc.
And of course when everything is bunched together under a singular platform brand and vision, the same eye of Sauron is watching every project, big or small.
I get that, but whose fault is that? That is what Sony means by organic growth and what MS has never seemed to be able to understand.
When we say a game cost xxxM$ to make, its not like after pre-production the publisher just plunked down $200M and said, "make it happen". No, every studio has an annual running cost. In a 250 strong studio with an average annual salary of $100k/year (and this is a very lofty extreme example here) that comes up to about $25M/ year. You can throw in another $5M in miscellaneous expenses. So that's about $30M/year on a AAA studio in active development.
If such a studio spends 5 years making a game, then the "project" cost is around $150M spread out over 5 years.
Again, this is a very extreme example as in most cases, most studios have an average salary head cost of under $50K/year.
Things like marketing, are not billed to the individual studio, but rather covered by the publisher as they would have an annual marketing budget. And then you have third party (or even 1st party third party contractors...etc).
In effect, when a company like sony does their fiscal yearly reports, the running cost of every studio they have is factored in. And for the PS business to be successful, whatever first-party games they release that year, need to pay for all their first-party studios (in a perfect world) or at worst come close to breaking even. And then they make their profits form the third-party sales of games on their platform.
This is why you don't go buying all the publishers in the world and having almost 30 separate $30M+/year AAA studios. That means that every single year, you are spending almost $1B to just keep your studios kicking. This means that now, the stakes are higher for everything. Also means that your floor for success is unrealistically high. Cause now, every game(s) you release in that year has to generate over a billion dollars in revenue. To just break even.
And MS did this to themselves. That's where MS is at now. And the worst part is, they lack both the user base or even the business model to recoup those kinda costs. And then the icing on the cake is that they lack the managerial guile to even course correct.