Sony has always followed the same strategy for video games since (more or less) the beginning. If you understand this strategy, then you can see it is inevitable that Sony would have to focus on Western games/gamers. Their strategy is basically this:
Hardware - Provide an excellent value. This means to sell at a loss at launch.
Software - Let major third party studios do the heavy lifting and make first party games to fill in the gaps for their target customer base.
Controller - Stick with the same basic design, but put in new features that Nintendo develops "just in case". (I.e. analogue stick, rumble, wireless, etc...)
This strategy basically means that Sony needs games that show off their powerful new hardware and how good a value it is. Most of these games are now Western games. Western studios focus far more on graphics than Japanese studios do. So then you get a situation where the games are oriented more toward Western gamers. On top of all of this Japanese studios are becoming more and more focused on handheld games, and Sony has figured out that it just can't win the handheld battle. (Again this is because their main advantage is showing off the value/power of their new hardware, which doesn't matter too much in handheld gaming.)
Is this a good idea? In the short term, "yes". It has made them a lot of money in the PS4 era. It is also the path of least resistance, since fighting Nintendo in Japan would be an uphill battle. And yet, Japanese games are the key to the long term victory. Western third parties sell their games on a lot of platforms now: Sony, Microsoft, Steam, Epic Games, Stadia, etc.... Too many companies are competing for the top pieces of the pie.
Meanwhile Nintendo is going to end up with most of the Japanese games over the next few years. Lots of these Japanese companies were going to make handheld games anyway before they even knew about Switch. On top of that most of the home Japanese games require less horsepower and are a better fit on the Switch anyway. Expect PS5 to be mostly shut out of Japan. The Switch is easily the platform of Japan's choice. But the thing is that lots of Western gamers like Japanese games too.
When there is that much uncontested strength on one platform (Switch), then what ends up happening is that Western games come to Switch too. That is why Sony made a mistake. They gave up a smaller market (Japan), but this smaller market is far too influential. The Japanese market is small compared to NA or Europe, but it disproportionately makes a lot of games. That is why it is dangerous for Sony to just give up on Japan. They let Nintendo get all of those third party games, and then they get schooled.
Expect the PS5 to struggle for the first few years like the PS3 did. Just watch, it will happen. The Switch will be too good of a value when PS5 launches (low price + huge library). PS5 won't sell until customers get tired of the Switch.