Sony going AAA only is so boring. They've also seemingly abandoned the "Playstation loves indies" sentiment that was so prevalent in the first half of the PS4 lifecycle. Hopefully this blows up in their collective faces spectacularly and changes are made.
Sony never went AAA only and never abandoned the indies.
Regarding their 1st/2nd party games not all of them are AAA games. Last year they released Dreams, Astro's Playroom or Sackboy. In the 2nd half of PS4 and for PS5 they also signed a lot of AA exclusives like some upcoming ones like Guilty Gear Strive, Oddworld Soulstorm, Babylon's Fall, Eitr etc.
PS4 had a ton of great indies, both exclusive and multi in the 2nd part of the life cycle. And seems it will continue being the same in PS5 looking at the PS5 promotional video streams (state of play, PS5 reveal etc) where a good chunk of the titles highlighted are indies too, many of them being exclusive (many of them being timed, console to let indies have their profit) titles from popular indie devs or really promising newcomers. Stuff like Kena, the next one from the Hyper Light Drifter team, the next one from the Superbrothers: Sword & Sworcery EP team, several ones from Annapurna, etc.
When it comes to the closure of Japan Studios, i still don't get why everyone quickly points the finger at Jim Ryan, while the actual head of Worlwide Studios, Hermen Hulst, gets a free pass. We know that Shuhei Yoshida greenlighted lots of weird Japanese titles while he was head of WW Studios, so whatever is happening how, Hermen Hulst is actually responsible, even if it means trying to refocus WW Studios on AAA western style titles, while ignoring the traditional quirky Japanese games.
They didn't shut down Japan Studio.
They reorganized it making it smaller by moving away its production/publishing part of externally developed games to merge it into the PlayStation Studios global operations and reduced its internal development part to focus it into the Asobi Team.
They did it after decades of Japan Studio releasing dozens of unprofitable games, not being capable of releasing a big seller. They had a ton of patience and had to do it sooner or later. Any other publisher wouldn't have waited that long. They didn't reduce it to avoid AAA: the opposite, they want to avoid money sinks like The Last Guardian or Knack and make smaller games like the Astro titles.
They will continue having Japan Studio games, Polyphony Digital games and tons of 3rd party exclusives big and small as they did during PS4, where they got some kind of exclusives from basically any known Japanese publisher and dev and they will continue doing it on PS5. In fact they recently signed a 3 ways deal with the parent company of CyGames (Granblue, Project Awakening) and the parent company of From Software, Kadokawa. Who also owns Spike Chunsoft, ASCII Media Works, Enterbrain, Chara-Ani, Kadokawa Shoten, Kadokawa Games, Media Factory and so on, and published games of tons of small Japanese studios like Grasshopper Manufacture, Game Arts, Mages/5pb, Nitro+ and many others.
Sony will continue getting both Japanese and western games, both internal and external, both big and small, both multi and exclusive.
Regarding Yoshida, he said he was going to cancel The Last Guardian but didn't do it because of external pressure of tons of fans asking for it.
As of now, Ryan is the CEO, he doesn't decide about 3rd/party games are signed or how internal development studios are managed. Herman is in charge of the 1st/2nd party games and studios, who at the same time also have their own studio specific management. Yoshida is in charge of signing indies.