This and I can also see them following MS route to releasing smaller first party titles too.

Exactly this. Everyone is so fixated on their profit margins but it is a compromise between short term profit for long term success. Low profit because of acquisitions and discounted consoles may seem bad now but will put them in a good position later on. The CEO was just being honest about where things could be better, he wasn't saying the survival of the business depends on it. People are talking about how this will mean porting their games to PC and Xbox day and date to save the business but PS3 was in a waaaaay worse position and even then they still didn't do that. Yes, I know helldivers 2 is on PC but it's a live service game and Sony wanted it to get maximum player numbers out of the gate. It will not apply to single player games I guarantee you. 

The whole thing about Totoki saying their "multiplatform" output and profits have been overblown everywhere.

Yoshida specified about 4 weeks ago that their multiplatform output refers to PC, Mobile, and the Cloud, aside from their main business, PS consoles

As for their profits, the results from the last couple of years are these:

https://i.imgur.com/7zxSCyQ.jpg" width="855" height="129">

Bungie was acquired by Sony in January 2022, at the time, executives confirmed that the payment was meant to be made in multiple quarters, as you can see in the above graph, profits reduced from 2022. 

Also, in the Q3 FY2023 results, they confirmed that profits are still reduced due to studio-related acquisitions.

One thing to note is that they need to improve their output a lot while keeping their budgets in check.

So the Switch 2 isn't going to be a ninplaybox?

From Nintendo's POV it doesn't really mean much, but what Sony and MS both doing this signals is 3rd parties a clear message that the old days are over and now the name of the game is having your content everywhere. If even platform providers like Sony and MS don't want to keep their own games locked into their own ecosystems, all that tells you as a 3rd party is you'd be insane to do that with your own games. So that's great for Nintendo to have the status quo that's existed post-SNES era for them shit on by MS/Sony and a new status quo where nothing is exclusive to anything but Nintendo games to Nintendo systems.

That is significant, but sure Nintendo having XBox games like COD + Halo + Forza will cover gaps in their library quite nicely, not even sure how much more support they would need past what they already got with the Switch if MS goes full blown multiplat (and I think that are going to do that gradually). Microsoft will almost definitely be the no.1 3rd party on the Switch 2, Minecraft is already the no.1 3rd party game on the Switch. Sony would just be laughable icing on the cake, but not really needed, it would just be a bonus. 

After PC, these studio heads are going to start to look at smartphones having way higher hardware numbers than anything else and in 4-5 years the smartphone of that time will be way, way more powerful than what's available today and these companies will scramble to try and sell their games that way too. Budgets will keep going up but sales of Playstation + XBox consoles will likely stagnate at the same level they've been at since the PS3 + X360 era. 

Also "increase your output" really isn't possible for a lot of these studios unless they make dramatically different games. A lot of these studios are going to make like 1 game every 5-6 years and they are going to be expensive, and that's just how it is. It's not 2004 anymore when they can make "epic" PS2 games in 2 1/2 years for a $40 million dollar budget anymore or work on 2 games like that at a time. 

The other huge problem is all these games were financed on the basis of dirt cheap interest rates, now that interest rates aren't so cheap, it becomes a huge problem how to finance a $100+ million dollar game project for a lot of studio while not getting killed by interest costs. 

It's just basic market math.
PS=games. Games=profits. No games=no profits. No profits=stock decline.

However, this compounded with the moves MS is making with XB, and SNY showing what look like small signs of uncertainty with PS, doesn't help.
If SNY looks to be more confident early next year and has a decent PS first party lineup ready, plus the GTA:VI hype, that $10 bil will not only return but increase.

Hopefully square jumps on board. I want 16 and Rebirth but will be waiting for the PC versions. Square will continue not getting my money until their PC support improves.
I also think some are jumping to conclusions. Getting High Fi on Switch and Playstation isn't the same as getting halo infinite. I'm not convinced halo is going to appear on competition anytime soon.

The Portal seems to be doing good, but the PSVR2 must have cost a lot to develop with it's new tech. Seeing that enthusiasm has diminished rapidly for this device, I would be surprised if it can recoup those costs.

It's too bad honestly on that front, because VR is legit, playing a decent VR game is a real "Super Mario 64 wow!" moment, even simple things like a tennis game feel incredible in VR, like you're on the court for real. 

I find VR games impressing me a lot more than standard gaming which is just the same thing with shinier graphics over and over again, something like Super Hot in VR is amazing and that game is pretty old now. 

But it's too expensive right now and no one wants a headset tethered to a damn console, you want something without wires like the Meta Quest. I haven't tried it but I've heard Gran Turismo in VR is incredible. 

Playing Beat Sabers, doing a bit of  VR climbing, adventure/puzzle and horror games. I think they all won at adopting their new gaming medium 👍