I don't give to much credence to rumors, but I'd say the writing has been on the wall for a while now. Sony's first party output has been almost entirely from western devs this generation. And apart from Gran Turismo, most Japan Studio stuff were ports. I get the whole business perspective argument, but I'd also argue for the value of a more diversified portfolio to attract and maintain the PS brand heritage and older consumer. I bet for many it doesn't matter, particularly in the age of social media streamers and influencers, where some free-to-play flavor of the week outperforms most publishers releases combined. But for me personally, if it does get even worse, I'll just migrate somewhere else for my main system.
I do think that MS and Nintendo, along with rising PC support, has the opportunity to attract a lot of Japanese devs and publishers looking for more lenient platforms. In fairness to Japan Studio, they typically run support for other larger projects, such as Demon's Souls. Astro Bot looks amazing, but I'd love to see more.
And I know its more hearsay, but if MS were to heavily invest in Japan, I'd likely switch easy. I seriously doubt it, but weirder things have happened. If they threw that weight around and snagged some companies that I love, such as Koei Tecmo, Sega, Falcom, or many more, I'd be stunned and doing whatever it took to secure a series X ASAP. For now Sony's second party and third party output has been good, its what keeps me on PS. But I still haven't dipped into Ghost of Tsushima because I'm so burnt out on their formula. Again for many it wont matter, plenty will say don't worry/panic, but as a fairly hardcore gamer it greatly matters to me. In the years since Switch's launch Nintendo has heavily outshone Sony's first party output in terms of variety and quality(to me ofc). And its gotten titles that would have been at home on a PS device. Its what kept me happy during the PS3/Vita/early PS4 era. So yeah, I'll be keeping an eye on Sony. Still looking forward to my PS5, and hope to be surprised.