The reason of Vita downfall was it being marketed as portable AAA machine, and then no one bothered making those AAA games. Sony itself destroyed interest for 3d party by releasing Uncharted GA which was obviously far more ambitious than what 3d party was willing to do with Vita, setting expectation bar too high. Meanwhile Vita is not "pocket PS3" by any means and following the whims of engineers by letting them get proprietary card format didn't help either.
What they should have done instead is copying Nintendo approach of making portable version of home console 2 generations behind, i.e GBA was SNES portable, DS was N64 portable, new 3DS looks like Wii/GC portable. It instantly creates a decent library of ports while not putting real competition, since these games are not new really. Sony probably thought PS2 lacked the hard hitting exclusives and tried pushing the focus to PS3, but the hardware wasn't ready for it.
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