To try and answer the actual question in a bit of detail, let's look at the history of the Japanese market in the last 25 years or so and the stages it went through. This is a pretty high level explanation but hopefully people find it useful.
Stage 1
PS1 launches as a very attractive proposition for third parties, moving away from cartridges and Nintendo's draconian policies. Third parties jump ship and with their combined forces (particularly Square, Capcom and Enix) plus some breakout hits from Sony the platform is able to take control of the Japanese market
Stage 2
Sony is able to successfully transfer their power from PS1 to PS2. Third parties provide a lot of exclusives to the platform, with more players finding success like Koei and Konami.
Stage 3
HD development throws a huge spanner in the works. Games take much longer and are far more expensive to make, and Japanese third parties can no longer afford to give PS3 the same level of exclusives they gave the PS2. They need to either go multiplat with PS3/360/PC or take some moneyhats from Microsoft. Their other option is DS and PSP which offer much cheaper development costs. Many Japanese third parties move their development resources to these platforms and the market follows. There's also the Wii, but it's caught in the middle as its not as cheap to develop for as DS and PSP, but its also not powerful enough to get the game made for PS3/360/PC.
Sony's first party became a lot a stronger than on PS1 and PS2, but not in Japan
Stage 4
PS4 launches and is a big success worldwide, but the same can't be said of other platforms. Vita and Wii U are complete disasters and 3DS has a bad start which spooks third parties. the 3DS does recover and does very well in Japan but only sells mediocre else where. Sony makes a smart move to push developers towards releasing gamse across PS3/PS4/PSV and this works at maintaining good support. However, third parties in Japan are not having the same level of breakout hits with new / invigorated IP as they did on PS1, PS2, DS and PSP. The only publishers able to do this any more are Nintendo and Level 5
Stage 5
Switch launches and third parties are understandably sceptical given Nintendo's recent history. But Nintnedo's ability to make hits for the Japanese market again pays off and the Switch quickly proves its strong hardware and software sales. But this is not another 3DS. Unlike that platform and other Nintendo platforms it is successful globally, uses standard controls, and has the power and engine support to get a lot of the games aimed at the PlayStation console.
Third parties are caught off guard and don't' have much for the system in 2017 apart from the games gave support with. They then start off by mostly doing late ports and these come in 2018. Nintendo continues to deliver strong hits for the system and we start seeing a steady increase in third party support for Switch (thought some third parties move quicker than others). The preferred platforms for small to mid third parties moves from PS3/PS4/PSV to PS4/Switch. Nintendo's long held approach of "build a big enough userbase and the third parties will come" is actually working for once.
Stage 6
PS5 launches and struggles with a lack of supply and the chip shortage. There are still some significant third party titles that are PS4/PS5 but a lot of third party output is now firmly PS4/Switch with Switch also getting some significant exclusives. The questions now are:
- Will PS5 get enough supply to build a big userbase in Japan?
- What will the third party situation be for Switch? Will we see it continue to steadily improve, will it stay at the same level as it was in 2021, or will it decline as third parties move to PS5 and make games that Switch can't run?
- Which publishers will make the next breakout hits in the Japanese market, and which platforms will those hits be released on?
Those are the questions that will decide what Stage 7 is like.