Japan is not a high revenue software region for Sony. Their first party titles perform solid but not exceptional (100-200k), third parties licensing is really where the revenue ought to be for them, but the Japanese software market outside of Nintendo and a few surprise hits is not in a great place.
If hardware profit margins were very low based on the yen, they haven't lost much by sales cutting in half. And the increased revenue on hardware ($70 equivalent dollars) is likely way more tangible even at half the units being sold. If before they were making $10 on every PS5 sold in Japan, now they're making $80. If they sell half as many PS5s, they're still making $30 more on hardware sales then they were before.
The real danger is not whether this financially makes sense in the short term. but whether it causes long term brand damage and dooms their future platform. A platform which won't be able to benefit from 3rd party exclusivity because the Switch 2 will likely share most of its third party library.
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