It's been a horrible generation for them. They can recover from it, but it will take time and the realization that splitting their audience up with streaming is a death knell. Need to go conventional, reasonably priced and powerful to get back to the 360 days. Going off on experimental bullshit with the cloud and streaming is a loser for them.
But as you said, there is major risks diverting resources away from traditional console gaming. The Scarlet foundation is currently shaky, and it is uncertain if diversifying now would end up doing more harm than good.