Dragon’s dogma has potential,

Yes the template is there and they bought in  some of the main guys from the Witcher 3. https://www.dualshockers.com/guerrilla-games-keeps-hiring-witcher-3-veterans-for-its-rumored-ps4-open-world-rpg/ I remember a doco on the making of Horizon and them talking about when they were struggling with stitching the the worlds lore into the game before they hired John Gonzalez from Fallout New Vegas, here it is found it.

Yeah, as nice as their engine is, one can't really know if it is well suited for an open world RPG. ND is also a very story focused group, their games have movie-like qualities and that's their strong suit, so again, would they be in their element in making a big RPG with branching options?

Was? Final Fantasy absolutely dwarfs Fable in mindshare/popularity. FF15 + FF7R have outsold the latest Fable, which IIRC happened to be the best selling Fable, by a comfortable margin. FF14 is one of the most popular MMO's today. None of the mainline Final Fantasy's these past two generations have bombed critically, aside from some of the spin offs or mobile titles, and these subpar entries didn't hurt FF15's sales. 

Anyways, the question wasn't about Bethesda as I addressed in my original post, rather the field of RPG's coming from Xbox Game Studios.

Could just money-hat Square Enix

Bethesda games can be fun if you like jank, glitches, bugs and corny dialogue. They are like bad B movies: fun to watch, but quality wise laughable. I'm currently playing Demon's Souls remake on PS5 and that game is infinitely better than any Bethesda game ever released.

I think people need to realize that when you look closer at the games Microsoft and Sony put out they are different. So by logic Sony needs an open world car racer to match Forza.
You cannot really compare the type of games Microsoft publishes to what Sony publishes, so people that keep saying Sony needs to copy Microsoft of vice-versa are just blind to the games each company publishes. Let's say you want Sony to copy Forza Horizon to compete or you want to play a game like that on PS because you don't want to buy an Xbox or game on PC. That's fine to think that since PS is you're preference, but keep in mind there's always going to be games that you want to play that's just not going to be on your preferred platform. I hope every game goes to all platforms so that everyone can enjoy games on their preferred platform, but unfortunately that will never happen.

I wouldn't say Sony really NEEDS a Bethesda like Rpg. They went 2 generations without any of those games and were very successful.

Honestly what they need is more variety in their first party output. It feels like their games are less varied now than they were during PS1-PS3 era's. I would like to see more Jrpgs, platformers, fighters, racers, etc. Bring back Ape Escape, Dark Cloud, Jak and Daxter, and Sly Cooper.

Sony doesn't need something to replace Bethesda RPG's, just like MS doesn't need to copy Sony with single player 3rd person cinematic games. Both offer something unique and why owning both or a gaming PC is how to go about it if you want those experiences.

Final Fantasy being a bigger IP than the majority of Xbox Game Studios RPG's, with exclusivity being tightened on the PS5 this generation, helps replace the gap from Bethesda styled RPG's.