If they make the PS5 BC, then all the games on the PSN Store can keep on selling. 

That's a much better proposition to publishers, profit wise, compared to having all the titles available through a sub.

Which is why I think it's just as likely that they won't have any backwards compatibility even though on a hardware level it would be easy to do

Maybe on a nice PC. But, you are not running a PS3 emulator on the PS4. The Jaguar CPU is just not powerful enough to emulate the Cell. 

Theoretically, it should be possible on the PS5. Both the CPU and GPU should have more than enough juice to emulate PS3 games. However, does Sony even want to do that?

logically what you are saying makes sense and i agree with it,but some of these companies dont use logic with everything though lol

hopefully you're right and we get proper BC for ps5

I definitely agree it will be powerful enough. Personally, I hope Sony makes the PS5 B/C with all of their systems. PS4 is a no-brainer. But, so is PS1 and PS2, really. I mean they have such a huge catalog of PS1 and PS2 classics on the PS Store. If PS5 can't play them, what's the point of having them there? And I could see them being able to do with PS3 games what they did for PS2 games on the PS4, upping them to 1080p, if they aren't already, with a nice AA solution applied.

It really would be the ultimate machine. And other than the staff that they already pay for to develop the emulators, it won't cost them extra for HW, as it would all be done in SW. 

I'd be shocked if they didn't. Would give xbox a needless 1 up next gen

If you consider "Pretty well" needing a current high end PC to run only a limited amount of PS3 games at sub 30 fps in most cases after extremely careful case by case tweaking of settings (for each individual game)... I suppose we have a very different understanding of what "pretty well" means.

Now taking into account the APU on the PS4 is hot garbage when comparing with that same high end PC, it's quite evident why Sony isn't able to simply emulate the PS3.

The problem isn't about the emulation of the PS1/2 era of hardware. I believe the issue comes from licensing rights of the software on the digital platform.

Definitely Sony isn't interested in having people putting their 20yr old disc of FF7 to then run the game. They make no money and Square makes no money from that.

This is why it's important to finally transition to a actual digital model (akin to Steam on PC). No more having to bind a game to the native hardware that played it originally, but instead being future proof as you transition from 1 platform to another.

I am many generations of hardware away from the PC I used when I played my first Steam games. Yet, every single game I ever purchased there works on my current and future hardware. No issues with licensing rights for all eternity.

I guess it comes down the logical choice vs their need to prove that cloud-gaming is a thing that is viable right now. One day it probably will be but as an alternative and not as a replacement