The decline from PS3 to PS4 ( less than 10%) is worlds apart from the decline from PS2 to PS3 ( more than 100%). I don't think anyone (not even sony) is expecting to turn things around, but more consolidate their audience and move towards a natural plateau where they maintain a core market presence. Commercially it just doesn't make sense for Sony to shape hardware around the Japanese market alone when they're now globally making more money then ever through doing the opposite. What they do have compared to PS4 is a more compelling software line up. 

Whereas the PS4 didn't get its killer apps until midway through its life (late 2016/2017) PS5 will get many of its own in the first 18months, I don't think that something to be taken from granted but for sure will need a wait and see what impact these titles actually have and whether they can shift hardware.

I feel sorry for PS5 in Japan. I don't think it will sell as well as Otter is saying it will. I want it to sell better than PS4 but I don't really see any reason yet why the Japanese would embrace the system. All the games we know about so far don't seem appealing to thee Japanese audience and switch seems to be in it's prime over there with the possibility of selling even more in 2021 than in 2020. Don't doesn't seem to care as not even one title seems to be catered towards japan. We shall see since is too early to tell but it doesn't look good at all.

You have to take it into perspective: The drop from PS2 to PS3 was ~100% in most markets, not just Japan. But the PS4 on the other hand improved from the PS3 in almost all markets, with Japan being the sole exception that we know of.

Bofferbrauer beat me to it, but given PS4 is looking to outsell PS3 by over 30 million globally, selling less in Sony's home country isn't a good outcome. And as Mnementh points out, a lot of Japan's medium sized third party software that used to be exclusive to the PS ecosystem is moving away from this as it's becoming less and less viable to only sell on PS in a market that is increasingly dominated by the Switch. And a lot of Asia seems to have similar tastes to Japan.

There will still be a place for PS5, but it will be interesting to see where the plateau you mention will sit in the end, if PS5 continues the decline seen since PS2.

Oh wow oh wow dem Momotaro numbers. Beast Crossing slaying as expected and RFA now above 2 million. Pikmin 3 is doing so well.
Tragic PS5 numbers (due to no supply?) and Cyberpunk falling off the cliff (to say the least).

That's... a surprise. Usually Sony rides a console till the wheels fall off. I'd expected PS4 production to continue well into this decade.

Maybe with the coronavirus total production capacity is limited and Sony needed to free up some by sacrificing the PS4.

On the other hand, the spike in sales due to coronavirus early-to-mid 2020 most probably made the people who would have bought a PS4 after the PS5 launch buy it earlier than expected. Also, with the PS5 selling so well (well, outside of Japan at least) and being backwards compatible, there's the possibility that there are a lot of used PS4 on the market that are much cheaper than new ones, killing off the market for the PS4 for Sony.

I think it's moreso has to do with Sony being a very different company now compared to even just a couple years ago. I don't think they have the same mass consumer electronics type mindset that Sony used to have for decades. Short production cycles and more revenue from digital products.

Agreed.

I also feel like this late PS4 buyers most likely wont get PS plus while early PS5 adopters will.

And PS plus is Sony's cash cow at the moment.

Top 30 3rd Party Games(3DS/PS3/PSV/PS4/NSW):

1. [2013/3DS] Monster Hunter 4 (Capcom) - 3.591.334
2. [2014/3DS] Yo-kai Watch 2 (Level 5) - 3.169.858
3. [2015/3DS] Monster Hunter Generations (Capcom) - 2.832.833
4. [2014/3DS] Yo-kai Watch 2: Psychic Specters (Level 5) - 2.632.550
5. [2014/3DS] Monster Hunter 4 Ultimate (Capcom) - 2.617.803
6. [2018/PS4] Monster Hunter: World (Capcom) - 2.564.928
7. [2015/3DS] Yo-Kai Watch Busters (Level 5) - 2.167.915
8. [2009/PS3] Final Fantasy XIII (Square Enix) - 1.967.887
9. [2011/3DS] Monster Hunter 3 Ultimate (Capcom) - 1.941.106
10. [2017/3DS] Dragon Quest XI (Square Enix) - 1.772.911
11. [2017/3DS] Monster Hunter XX (Capcom) - 1.718.052
12. [2018/NSW] Minecraft (Microsoft) - 1.700.000+
13. [2020/NSW] Momotaro Dentetsu (Konami) - 1.500.000+
14. [2016/3DS] Yo-Kai Watch 3 (Level 5) - 1.495.891
15. [2013/3DS] Puzzle & Dragons Z (GungHo) - 1.470.222
16. [2017/PS4] Dragon Quest XI (Square Enix) - 1.368.698
17. [2013/3DS] Yo-kai Watch (Level 5) - 1.294.133
18. [2013/3DS] Dragon Quest VII (Square Enix) - 1.238.660
19. [2016/PS4] Final Fantasy XV (Square Enix) - 1.042.951
20. [2009/PS3] Resident Evil 5 (Capcom) - 1.041.195
21. [2020/PS4] Final Fantasy VII Remake (Square Enix) - 1.000.000+
22. [2008/PS3] Metal Gear Solid 4 (Konami) - 998.429 
23. [2015/3DS] Monster Strike (Mixi) - 968.543
24. [2011/PS3] Final Fantasy XIII-2 (Square Enix) - 940.269
25. [2012/3DS] Dragon Quest Monsters (Square Enix) - 921.310
26. [2013/PS3] Grand Theft Auto V (Take Two) - 880.877
27. [2012/PS3] Resident Evil 6 (Capcom) - 866.735
28. [2015/3DS] Dragon Quest VIII (Square Enix) - 864.865
29. [2019/PS4] Kingdom Hearts III (Square Enix) - 861.226
30. [2012/PS3] One Piece: Pirate Warriors (Bandai Namco) - 828.132

• 3DS - 16
• PS3 - 8
• PS4 - 5
• NSW - 2

3DS TOTAL: 32.066.684

PS3 TOTAL: 7.523.524

PS4 TOTAL: 6.837.803

NSW TOTAL: 3.200.000

Overall 3rd Party Publishers were slow to transition to the Switch, but next year it's very likely that Switch will start to catch up to the 3DS.

I think both Minecraft and Momotaro will end up with at least 3 million physical sales, while Monster Hunter Rise has potential to sell above 6 million if an expansion is released in 2022. This will bring 3rd Party sales to 12 million on the Switch and bump off One Piece: Pirate Warriors off the 30th position. The main difference between the past and right now is that games like Minecraft, Momotaro & Monster Hunter Rise are unlikely to be replaced very quickly. Thus their lifetime totals will end up far higher than their initial launches. In the case of Monster Hunter Rise, I anticipate it would end up as the best selling 3rd Party game of all time in Japan. 

I don't think Final Fantasy XVI has a chance to sell above Kingdom Hearts III. For Square it will be interesting if Bravely Default 2 is actually is able to find growth and show legs similar to DQXIS on the Switch. Obviously when Square releases DQXII, DQB3, DQM4 etc they have a great chance to make the Top 30. I'm anticipating we get at DQH4, DQB3 or DQM4 as their major fall game for 2021 on the Switch. 

Olive Town by Marvelous is the next dark horse after Momotaro, I think that this type of game can do very well with the New Horizon audience. Currently its too early to discuss the potential of Rune Factory 5, SMTV, PES, Monster Hunter Stories 2 etc but after Momotaro, I'm would not be suprised if something unexpected blows up in 2021. 

Before Breath of the Wild launched no one in the sales community was expecting a Zelda game to be able to sell over 2 million in it's lifetime but it happened. No one expected Momotaro to be the first break-out 3rd Party hit on the Platform. No one expected that Minecraft might be able to sell 5 million copies physical+digital on the Switch lifetime - yet all of these thing happened. New Horizon has showed us that Switch isn't following historic trends, it's carving out it's own history and despite the slow start 3rd Parties will end up reaping massive benefits from the system in Japan and elsewhere in the coming years.

Sales by Year

1. 2013: 8.475.226
   
   1. Capcom
   2. GungHo
   3. Level 5
   4. Square Enix
   5. Take Two
2. 2015: 6.834.156
   1. Capcom
   2. Level 5
   3. Mixi
   4. Square Enix
3. 2014: 5.802.408
   1. Level 5
   2. Capcom
4. 2017: 4.859.661
   1. Square Enix
   2. Capcom
5. 2018: 4.264.928
   1. Capcom
   2. Microsoft
6. 2009: 3.009.082
   1. Square Enix
   2. Capcom
7. 2011: 2.881.375
   1. Capcom 
   2. Square Enix
8. 2012: 2.616.177
   1. Square Enix
   2. Capcom
   3. Bandai Namco
9. 2016: 2.538.842
   1. Level 5
   2. Square Enix
10. 2008: 998.429
    1. Konami 
11. 2019: 861.226
    1. Square Enix

There is a lot of similarities between 2021 and 2013, New Horizon & Ring Fit have greatly expanded the audience on the Switch, while Monster Hunter Rise will also diversify the audience further. The main additional focus should be the stacked line-up by both Nintendo and third parties. Outside of MHR, we have Bowser's Fury, Breath of the Wild 2, Olive Town, Rune Factory 5, Monster Hunter Stories 2, SMT V, Bravely Default 2, imagine if a few more major titles get revealed for Obon & the fall.. 

This is the main reason to expect 2021 hardware to end up higher compared to 2020, New Horizon, Ring Fit & Monster Hunter Rise will continue to attract new audiences - while Switch is will make additional gains due to the fact it's the only viable platform in Japan going forward, as the PS5 is unlikely to sell more than 1 million hardware per year. The decline the PlayStation ecosystem has seen will be additional fuel that enables even greater consolidation of the market than we witnessed in 2020. Next year Switch will likely make up over 90% of Hardware & Software sold in Japan. It would be an unprecedented year, where certain preconceptions about the Japanese market might be shattered