There's no market for it, Sony aren't just leaving for no reason
Hasn’t PS5 already sold like 600k in Japan in 5 months in spite of major supply issues? Clearly there is still a market. It might not be as large as it once was, due to Switch dominance, but it’s still very much there. As long as there are Japanese devs and Japanese gamers who care about high end graphics that Switch can’t handle, there is a subset of the Japanese market for MS and Sony to fight over.
Forget 'Japan'. Look at it as a singular market, that importantly has different tastes.
Percentage of global marketshare Japan accounts for Playstation:
If you're investing and you look at these statistics, it makes sense to significantly lower support and finances for the region. Specifically, when costs are rising and when there is a stronger overlap in other regions in regards to software.
Lets be real, Sony isn't fighting MS for Japan.