I would actually use the money from PS+ to improve PSN and the PS5 OS for the entire generation.
I would be much happier with PS+ if I got no free games, but PSN was more Reliable/Faster, and the PS4 OS had continued to get meaningful UI improvements the whole gen.
We have not seen any improvements to PSN for a years. Online support is being pulled from 1st Party PS4 Games. The PS4 is going on 3 years without any UI improvements or New Features in the OS.
I have no problem putting money towards people constantly working to improve the Network and the OS, but I have Zero interest being forced to pay $60 a year for 24 random games, I either don't want, or have already bought, just to be able to access online gameplay. If I have to pay for Online Gaming, then I expect that money to be spect on improving online gaming, and optimizing the OS to continually improve the Online Gaming Expereince.
This is why they should at least offer 2 PS Plus options, maybe more with PS Now built in. A Plus package with just access to online for around $25 per year, a Plus Premium package with free games, demo's, etc, for around $50 per year, and maybe a Plus Premium Now package for around $75 per year.
Some users will save and go with the cheaper option, but some will pay more and opt in for the all in one more expensive option. Overall the user base should grow bringing in even more money. This money should be spread across many sectors like hardware, software, online, next gen, etc.
Assuming PS will spread this sub money to more than just online services, and use some of it for hardware purposes going forward, if there were 2 possible outcomes for PS5 hardware based on PS Plus subs, which would you prefer?
1. PS4 having free online this entire gen, leading to a $399-$499 PS5 that cost $399-$499 to make. (imagine another PS4 type launch basically)
2. PS4 having paid online as it has all gen, leading to a $399-$499 PS5 that cost $599-$699 to make. (imagine a PS3 type launch but affordable)
I think PS would be crazy not to use some of this money for extra manufacturing costs to make the next gen hardware better than it otherwise would be, while also using some of those sub funds, as well as the next gen subs, to offset the cost of the subsidy for that better more affordable hardware.
It's possible that PS just offers choice 1 no matter what and only uses the sub funds for online since that's where it came from, but I think that would be foolish of them. Using it partially for better more affordable hardware to get as many people into the ecosystem as quickly as possible would help justify the sub cost for many people. Others won't care regardless though and would just rather have free online.
This is similar to how I was trying to explain to someone about why Online is free on PC and Mobile. They were going on about how they don't have to pay to play online on their PC and Smartphone so they shouldn't have to pay on Consoles. I said, you could have online for free on consoles, all you would have to do is pay $1,200 for a $400 console. PC's and Smartphones are sold at 2 - 3x cost, consoles are sold at break even or a loss. PC and Smartphone sellers make money off the hardware, console makers make money off software and services. In the end, you pay the same, it is just a matter of whether you pay up front, or over time.
It is really hard for people to understand that Sony and Microsoft are basically giving you a Console for Free so that you will spend money in their ecosystem.
While there are more than a few problems, I think the biggest issue is the lack of choice for online. 1 choice for $60 per year and that's it, and it's certainly not bare bones. If PS at least adds another option, or more, especially a much cheaper option, this should help. PS3 is the other problem.
Another question to ask is how much if any of the online price was baked into the PS3 hardware? I have to assume some cost was in there, and that online wasn't completely free, even if it was only a small portion of the msrp. While going from free online to paid probably seems ridiculous, you also got a much cheaper more affordable console right off the bat, but have to pay a fairly reasonable amount over the course of your online playtime on that console. Not to mention PS4's online is considerably better than PS3 in many ways. $600 was too much all at once, so it was spread out over years with PS4. PS was overly generous with PS3 because they screwed up and MS struck Live Gold, but they figured things out, regrouped, and presented a much more reasonable offering overall this time around with the PS4 ecosystem. It's not perfect though, as nothing ever is. Nothing in life is free unfortunately and everything get's paid back one way or another eventually.
Paying for online, even a lesser amount, would be worth it as long as the online system as well as overall ecosystem benefits from it, and could even lead to things like the end of mid gen consoles possibly. If PS can launch another PS3 esque console in terms of hardware and software improvement based on today's tech, for $399-$499, they should be able to go another 6 or more years before needing new hardware, like PS3. This of course would help devs and would mean even better things for games next gen.