You both have just misunderstood what is being said. PS5 being niche has to do with consoles being a small segment in the greater gaming market which includes handhelds, but more importantly PC and smartphones. The number of console gamers are dwarfed by smartphone gamers alone, and most likely even PC gamers.
PS5 appealing to the hardcore crowd is literally how every PS console is launched. The PS4 wasn't being sold to the average consume from day 1. And you could easily argue that it still hasn't even hit a mass market price point yet.
There shouldn't be any concern that Sony are clueless to the PS4's success. They know what made it successful and and they will follow it up with moves to retain that success (such as BC, which already puts Sony ahead in the race)
And the censorship issue bring brought up as some Achilles heel for Sony is straight up the most laughable criticism of Sony atm.
PS4 was successful because it was a console made for all types of gamers not just a niche hardcore audience. Price point helped a lot here too.
Censorship is not a laughable criticism, its a minor disappointment to a varied market of gamers. If you are okay with censorship in your games than more power to you. If I had a choice to buy a game on two platforms, one was a censored version and the other offered the uncensored version than I personally will buy the uncensored version. I am an adult gamer, I don't need censorship in my games however that's my personal preference so no disrespect if you prefer it.
I don't expect Sony to start pushing away AA + A developers. Just look at the amount of indies Sony has published/collaborated on, the VR developers they support, and the amount of "niche" Japanese games on the PS4. Nothing indicates they're shifting to solely focus on AAA level content. The censorship issue seems to be blown out of proportion. To me it sounds like they want to start off the generation with a stronger launch of AAA exclusives/content compared to the PS4. The only thing that would make a PS5 launch a failure would be an incredibly high price point ($599+). I doubt Sony makes this mistake again. We might get a stronger machine than previously imagined, but I'd bet Sony would rather take a $100+ loss on hardware, and break even with software/subscriptions.
MS does not have the same amount of juggernaught IP's as Sony does. God of War, Uncharted & Horizon:Zero Dawn will eclipse the highest selling Halo, with TLOU:PT.II doing so as well. More importantly, Gears + Halo have taken a massive dip in popularity this generation, and nothing suggests this trend will change, especially since the original developers of these IP's are no longer working on them. SIE franchises well sell more, review better, and move more hardware, compared to MS IP's. Its going to take more than a few studio acquisitions to overcome that.
I think you underestimate MS's IPs. Especially when you include a new IP like Horizon Zero Dawn to Halo. Halo is one of the biggest gaming IPs in the industry. Its like me saying that Ori and the Blind Forest is bigger than Killzone, Infamous, Knack etc.
Ill give you a couple examples below..
1) Do you think Uncharted, God of War and Horizon ZD are bigger games than Minecraft or World of Warcraft? Becasuce those games are not critically acclaimed anymore and are on the decline soo to say any of those Sony IPs are bigger than Halo is basically the same thing.
2) Did you think in the WiiU era that Uncharted, God of War and Horizon ZD are bigger games than Mario because Mario 3D World on WiiU only sold 5m just like Halo 5 did on the X1?
Just because a game was in the decline doesn't mean the IP has become smaller or dropped in size. God of War was also in the decline on the PS3 and Sony had to Reboot it to get it back on the positive list. Similar story to Halo Infinite. Console sales also add a major handicap to selling 1st party games especially with Sony's heavy bundling as well.
Sony offered cheap bundles for majority of there 1st party line up on a system that has sold more than double the Xbox. Xbox only bundled games like Halo 5 in there more expensive bundles as well as offering digital codes instead of physical copies of the games.
Look no further than last gen when Halo topped Uncharted in sales and Gears topped GoW in sales on the 360 which was on a system that was levelled to the PS3 in sales.
Personally ill take any Rare IP over majority of games on the market, like Perfect Dark, BattleToads and Banjo Kazooie.. so to say MS doesn't have big juggernaut IPs is silly.