So if the hardware situation improves, will the software sales situation really improve? Nintendo Switch has basically occupied close to 20 of the top 30 best selling titles on the weekly charts in Famitsu for the majority of its life. This basically makes Switch the de facto console in Japan. I don’t know how PC is in Japan but I doubt it even affects the Switch much there. I know digital sales are a bigger deal now than say even 5 years ago, but that still may not make up the difference as even digital sales on Switch have steadily increased so whatever releases on PS5 will still struggle to stand out on the charts in Japan.

Sony is still going to get almost 100% of AAA games by default, including from Japanese developers. The likes of Capcom, Square Enix, etc, are still going to support the PS5 as if it's the market leader even if it's not.

Couple this with the current severe supply constraints easing over time, and PS5 will most likely be doing better say two years from now than currently.

What AAA games sell on Japan? Final Fantasy?

AAA games is not determined japanese market leader. Wii, DS, 3ds, and Switch don´t have AAA Japanese market. Ps4 have all third party and AA A exclusivity ( because synergy with Psvita) and yet declined. Why Ps5 will be better performance-based in nothing? Software wise in almost two years is only disaster perfomance.

What game of PS5 have 300k physical now?

Your assumption doesn´t have an anchor on the reality of the market.

PS5 can´t maintain 3 games on top 30.

This is reality of market, rest is wishful thinking based in hopes and dream, I ´m sorry. 

PS5 will get the next Monster Hunter game and probably Dragon Quest 12 too given its using Unreal Engine 5, both massive system sellers.

PS5's situation now is not indicative of its long term prospects because it's situation now is the result of a severe chip shortage that will not last forever.

Long terms prospects without analyzing the market now is wishful thinking.

Losing the Japanese market and East Asia market.

Stronger competition ( Switch and Xbox Series)

The current situation is dependent on non-permanent circumstances. The chip shortage will not last forever.

And it's certainly not "wishful thinking" as I am not a Playstation fan and not really bothered if it succeeds or fails.

This is not reality.  Most of the big selling titles, the ones that sell 3m+ in Japan, are published by Nintendo (or Pokemon Co.).  The Switch is full of these kind of titles: Pokemon, Smash Bros, Mario Kart, Animal Crossing, Splatoon, etc....  Switch is getting 3 titles like this in 2022 alone.

Meanwhile, PS5 will be lucky to get one 3m+ seller, and it will be the next Monster Hunter.  That is assuming the PS5 doesn't hold MH back so much that it underperforms like everything else so far.  DQ12 will be on a Nintendo system, either Switch or Switch 2.  It will probably be on PS5 as well, but it won't really move systems, because most people will buy it on a Nintendo system instead.

When you have all of the big selling titles on Switch, it really shows why PS5 software isn't selling.  Why buy a PS5?  For the Japanese, there really isn't a good reason.  All of the biggest games are on Switch.  People don't need a PS5.  And since software is selling so badly on PS5, more and more third party games are being moved to Switch every year.  There really isn't much of a reason for people in Japan to get a PS5.

Except it is and and you've said nothing to negate Curls point. You're talking about Japans best selling games (3m+), but Curl is talking about third party AAAs. Sony will continue to get most of the AAA games and fulfil that audience which is why Elden Ring, Resident Evil 8, Resident Evil 4, Final Fantasy XVI, Street Fight VI, Forspoken, Tales of Arise, Soul Hacker 2, Star Ocean 6 and a bunch of other games are not coming  the Switch. Japanese developers will still put Playstation on a pedestal because many of these games get the majority of their sales outside of the Japan where they've had plenty of success on Playstation.

RE Monster Hunter World, 90% of the games sales came from outside of Japan. The Japanese market is not dictating what platform it arrives on. The franchise now has a 20m seller and it done it without a Nintendo platform. 

The 3rd party dynamic puts a floor on how bad Playstation can do in Japan but Switch 2 can disrupt that but PS5 will have a few years to establish itself before that is a threat. 

Though in regards to the Japanese market, once more hardware units are available at retail, you think the PS5 will start to occupy about half of the top 30 titles on the weekly charts? Most of the AAA titles on PS4/5 recently have not lasted on the charts beyond maybe 4-6 weeks. Games like Zelda, Mario, Pokemon, Animal Crossing, MHR, and even DQXIS (in which the PS4 original released before the Switch version) have lasted on the charts beyond 4-6 weeks. The switch has basically dominated the sales charts, taking at least 2/3 of the weekly charts for the last few years or so. Even almost sweeping the charts for several months, which is almost unheard of even in this day and age. It’ll be even harder for the PS5 once the Switch 2 (if announced) gets going.

Actually I did.  Curl-6's main point is that the PS5's poor sales in both software and hardware are due to a chip shortage, and once the shortage ends, then sales will significantly improve.  Look:

My point, in contrast, is that PS5 has serious troubles, because all of the top selling games in Japan are on the Switch.  

Both curl-6 and I agree that PS5's sales are poor, but we are disagreeing on the cause.  Big budget games, are actually irrelevant.  It isn't the budget of the game that matters, but it's sales.  Maybe Balan Wonderworld actually had an awesome budget?  Who cares?  It didn't cause the game to sell well.  It's the sales of the games in Japan that will determine PS5's fate in Japan.

Almost all of the really big selling (3m+) games belong to Nintendo: Pokemon, Animal Crossing, Smash, Mario Kart, Splatoon, etc....  Switch even has a Monster Hunter game, and DQ12 will definitely be on a Nintendo platform.  Switch has everything.  That is the PS5's problem.  The only game that will help it significantly will be MH World 2 and even after it releases, PS5 will not sell like PS4 did during the same time period.  People are trying to make a big deal about FF16, when it won't even outsell the Kirby game that released this year.  Kirby sells decent in Japan, but it is nothing compared to Splatoon, Animal Crossing and Pokemon.  Likewise Final Fantasy in Japan is nothing compared to Splatoon, Animal Crossing and Pokemon.  That is PS5's big problem.  It lacks games that can sell like the top Nintendo games.

We already had a similar situation play out between 3DS and Vita.  Vita got plenty of games, but it didn't have the heavy hitters that the 3DS had.  PS5 is in a similar situation.  It will get games, but they aren't going to sell like top Switch games.  PS5 has the same problem that many losing consoles have had in the past.  They just can't compete with the competition.  It's not the chip shortage that is the PS5's main problem in Japan.  It's main problem is that it is competing with the Switch.