Thanks, we are entering an era where Nintendo will have 70% of Hardware market minimum. Event at the best-case scenario PlayStation family will sell less than 1.5M combined next year. Let's say they lower the price of the PS4 once the PS5 launches, will it sell more than 500K for the year? Very unlikely and if the PS5 costs more than 50K Yen it's very unlikely PS5 sales surpass 1M next year, just for reference PS4 sold 1.27M in 2015, and PS3 sold 1.2M in 2007. The PS4 basicaly had no competition due to the Wii U, while the PS3 was close to that price but Sony's market share has contracted since 2007 and they are facing far more competition than the Wii which only sold 12.75M in Japan.
Overall anyone who is hoping for some sales in Japan will need to do business with Nintendo going forward and this is unlikely to change. Once Sony offers a portable alternative perhaps we might see some competition again but for the time being, even Earth Defense Force a game that has never been on a Nintendo device is set to launch on the Switch next year. D3 Publisher have historically been one of the smaller publishers that never had that much presence on Nintendo hardware but even they see the writing on the wall. By the end of next year, only Capcom and Falcom will be left. The decision will be made easy by the PS5 launch in Japan which will cement Playstation's role of bringing AAA Western Games to the Japanese public. It's a small niche but with gaming habits in Japan, there is little chance of a console like the PS5 to really sell anywhere near 10M, especially while competing with the Switch for AA support.
Even PS4 with some of the biggest 3rd party Japanese games like Monster Hunter, Dragon Quest, Final Fantasy, Kingdom Hearts, Metal Gear Solid, Yakuza, Resident Evil, Persona, Nier being 90% exclusive to the Playstation ecosystem the PS4 is struggling to reach 10M. If you risk launching the next Persona or Nier there exclusively you can't even guarantee if it will sell as well as the prior games. Historical trends tell us to expect further decline for series that choose to remain exclusive until they become irrelevant for their home market.
In the meantime the growth will be seen by those who embrace AA development, ports of forgotten games, publishing indies in Japan, and finally developing new IPs and experiences that could be enjoyed best on the Nintendo Switch(like Fishing Spirits or Fitness Boxing).
As mentioned before Western indies have filled the void left by the lack of 3rd Party support. Games like Stardew Valley saw growth thanks to the lack of Harvest Moon for example. Games like Overcooked, Human Fall Flat provide co-op experiences that have helped them become evergreens in Japan on the eShop. Small outfits like Fly High Works who are localizing Western indies for Japan and launching their own games set to profit the most out of the current situation.
There's so much wrong with this post that its hard to know where to even start.
PS5 will likely do as well as PS3/4 (9-10 million) which is still good. The national sensation that was the Wii only did 12.75 million. Software sales for PS4 are still strong, and even with low digital percentages have surpassed the PS3.
PS4 continues to get better Japanese support that the SW/3DS, and the same will be true for PS5. Playstation always get the best Japanese support simply due to their global software and hardware sales. Domestic sales are not as relevant and even if they were PS4/5 would still get said support.
You mention historical trends yet completely lie about said trends. I'll be showing both WW and JP:
Persona 5, Nier, Nioh, DQH/B, MHW, RE7, RE2R, DMCV, FFXV, FF7R, KH3, DBZ, Naruto, AC7, EDF, Power Pro Baseball, all showed record breaking growth largely if not entirely due to Playstation.
Atlus best selling game of all time is Persona 5 (PS4/3)
Tecmo best selling game of all time is Nioh (sales mostly on PS4)
Capcoms best selling game of all time MHW (sales mostly on PS4)
RE2R and RE7 outpacing RE5/6 (sales mostly on PS4)
DMCV best selling game in the franchise (sales mostly on PS4)
FFXV on track to match FF7/10 (sales mostly on PS4)
FF7R fastest selling FF of all time (exclusive on PS4)
KH3 fastest selling KH of all time (sales mostly on PS4)
DBZ,Naruto best selling anime games of all time (sales mostly on PS4)
AC7 broke franchise records overseas (sales mostly on PS4)
EDF5 best selling EDF of all time (exclusively on PS4)
Power Pro best selling since PS2 entries (PS4/V)
As you can see, in reality JP third parties have had record breaking success on PS4 and hence its no surprise that PS5 support will be stronger than SW.