3rd party sales declined too. Software numbers overall are a decline from pre-pandemic Q1 FY2019 (12 million 1st party games sold on a smaller install base). 2019 was quite a weak year in terms of 1st party software releases; one of Sony's weakest.
Clearly, the slow PS5 adoption rate isn't offsetting PS4 gamers switching to other platforms or holding out to play these games on PC or PS5 when they finally manage to get one.
I know but I expected short-term legs and bundles to carry them well beyond the numbers we're seeing. 1st party sales in particular are shockingly low.
The low shipments of hardware finally caught up with them. If Sony actually shipped enough consoles as usual, then software sales would follow the usual trend.
If PS4 had shipped 3m more by this point and PS5 had shipped 4m more by this point then that is 7m PS owners that would be buying software right about now.