During the entire generation people stressed how bad the CPUs were in 8th gen consoles. But quite frankly, I thought they were fine because developers didn't care about pushing CPU. More often GPU bottleneck was the issue and it makes sense given graphics are often the focus. Even now with crossgen content, seems like developers are mostly struggling with GPU. Even with Cyberpunk it seems to me GPU was the real limiting factor in base console versions along with just being poorly optimized.

Modern engines tend to scale very well. I mean we see impressive games running on Switch. So unless the scale of next gen games is really beyond what 8th gen can handle, I think many games should be able to function as cross gen. UE5 is being hyped as next gen tech, but I anticipate it will work well on mobile and 8th consoles as well.

Supply problems slowed PS5 production far below demand, so maybe it's a necessary choice to extend the period of cross-gen releases. BTW the offer is mainly aimed at existing PS4 user base, as the pandemic crisis forced Sony to kill production of old gen new units to use as much production capacity as possible for new gen. Ninty managed the supplies issue in this difficult period far better, but we must consider that mobile chips small die size helped it a lot, as far more can be made from each wafer, and also the NS smaller package helps logistics in such periods.

"There's a difference between what is actually exclusive and what most people think are exclusive. Most consumers are not as informed as people who frequent forums. As an example Breath of the Wild. It released on the Wii U, yet most people are going to list it as a Nintendo Switch exclusive. Most people are probably going to do the same for a lot of these upcoming PS4/PS5 and XO/XS games. And Sony's marketing has been trying to go the extra mile to let people know that Horizon, God of War, etc are PS5 games."

It's true that "most consumers are not as informed as people who frequent forums."  Most people don't know what's on the the Wii U, because only about 13m people owned a Wii U.  The PS4 has over 115m install base.  They'll know what's on the PS4 whenever they look at what the store has (either retail or online).  Then they'll realize they don't need a PS5.  What you describe as "most consumers" are the very same people who won't buy a PS5 when the same games are on the PS4.  If Sony wants to sell the PS5 to "most consumers", then they are going to need some games that people can't play on PS4.

"There are several systems that had a decent launch, that dropped off very quickly after. But there aren't any systems that retained its sales for 8 months and then dropped off."

Here are the total shipments of the N64 and PS1 at the end of their first full fiscal years:

PS1  4.3m
N64  16.13m

It really looks like the N64 is going to clobber the PS1 doesn't it?  And we aren't even this far along with the PS5 yet.  Basically, if the PS5 has this kind of lead even at March 31, 2022 then it still means absolutely nothing.  The shipments for PSP and DS for their first full fiscal years aren't quite as dramatic, but they still tell a similar story:

DS 16.72
PSP 17.1

This one is gonna be close, but we have to give it to PSP right?  Nope.  It's still too early to call by data alone.  Again this corresponds to March 31, 2022 for the PS5. 

Now, in either of these cases we could have looked at other factors to see if the winds were going to change.  For example, we could have seen that the CD Rom was drawing in more third party games for Sony and less for Nintendo.  Those first year sales for the N64 were based on expectations from the SNES era, since Nintendo did dominate in Gen 4.  But that also means PS5 is in the same boat.  It's doing well at first, because the PS4 did well.  But at the same time Sony is making mistakes with the PS5 and the competition is tougher this time around.  Cross-gen first-party games on PS5 are a dumb idea.  (So is a $500 price.)   Meanwhile, Microsoft just bought a bunch of studios and Nintendo's system is selling competitively with the top systems of all time.

PS5 is not guaranteed any kind of success.  No console gets a free ride.  They have to actually do things that will attract customers to the PS5.  So far, they aren't doing a whole lot.

Bingo, updates are mandatory and one of the most requested features is to make them optional (since they tend to cause problems every time). But yep, they want keep one version. What is strange is why they are locking out options to mod it back to original draw distance behavior. Some of the latest 'optimizations' have made it impossible to fix the tree LOD and other LOD issues.

GT7 will likely be updated and added to throughout the gen just like GT Sport. The question is, how long will the ps4 receive those updates and will the ps5 get updates that aren't possible on ps4. What I hope to see in GT7 on ps5 is dynamic time / weather and full psvr 2.0 support. Seasons would be a nice bonus, as well as multi-class endurance races with 100+ cars on track. But I need to manage my expectations, cause PD...

I'd prefer they not be.

PS5 and Xbox Series having almost no next gen exclusives is really killing any excitement I might have had for them, and when the Switch 2 arrives, I'd want games for it to go beyond what's possible on Switch 1 instead of still being bound by the limits of a mobile SoC from 2015.

I doubt there will be a "Switch 2"... what I expect to see is a Switch Pro of sorts and that will be around for the next 4-5 years.

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As for Sony's "U-turn", I don't think sony saying they believe in generations and releasing cross-gen games are mutually exclusive.

Doing one does not mean you can not do the other.