Some of their experimenting last gen just ended in failure. They have to acknowledge that just as much as gamers do. From a karting perspective, LBPK and Modnation both look terrible visually. Just look at what Nintendo did with Mario Kart 8, a game that isn't on much more powerful hardware, compared to those two. MK8 is visually consistent and flatout gorgeous aside from the jaggies. It's also a game that runs at 60fps. Yes, it also has frame pacing, but those other two games run at 30fps with framerate drops. Why the hell is that?
The tracks also aren't anywhere near as fun. Sure, a major part of those is in creating tracks, but you also should have great tracks on disc from the start. In general the games were really just a mess. Nintendo basically has the formula distilled to its purest form and those other games missed the point. I think in many ways Crash Team Racing was the last non-Mario Kart game that got it right. Although Diddy Kong Racing did a lot right as well.
With that said, I don't htink they're scaling development back as much as some fear. Yoshida was recently asked about 2017 and said this
http://gematsu.com/2017/01/atlus-sq...re-2017-ambitions-famitsu-dengeki-playstation
This is especially notabole because after PSX there were some people in the first party thread speculating that we may have seen all of Sony's in development games aside from whatever Sucker Punch is working on.
Some additional comments from Sony Japan producers
http://gematsu.com/2016/12/4gamer-interviews-japanese-creators-2017-ambitions#XQyikEy44EWljt9H.99