That original chart leads me to believe that it isn't the Sony brand but consoles in general that are slowly but surely being replaced by other forms of entertainment with the Japanese. I bet you can find a related chart that shows mobile gaming skyrocketing.
The dream of living room consumer electronics convergence died with the living room itself, folks.
Some of the biggest games on the Switch in Japan like Ring Fit Adventure, Splatoon 2, Momotaro require you to play them in your living room.
Its not about the form factor but rather a combination of the price, size, and most importantly software. Sony has been unable to maintain sales of big 1st Party franchises like Gran Turismo, Hot Shots Golf/Tennis, Ape Escape, Ratchet & Clank, Boku no Natsuyasumi which all sold above 500K on the PS2, while from a first-party perspective the only new IP in recent years likely to sell more than 500K is Ghost of Tsushima. They have also been publishing very few Japanese Exclusives since the PS4 launched.
Overall the PS3 was the last time they were trying on the Japanese market from a 1st and 2nd party perspective.