The gap from 2023 to 2024 should continue to close and flip in the other direction within the next several months.

True, but they also need to do something about PS5 exclusive game pricing. The differences in Japan seems bigger then in the west.

Some PS5 exclusives:

FF16: Y8980
FF7 Rebirth: Y8980
FF7 Remake: Y8980
Spiderman2: Y8164
Ratchet & Clank: Y7900
Ghost of Tsushima: Y7900

Comparing to some Nintendo exclusives:

Ringfit adventure: Y7900 (including accessories)
Tears of the Kingdom: Y7200
Breath of the Wild: Y6980
Fire Emblem 3 houses: Y6980
Mario Kart Deluxe: Y5980
Super Mario Bros. Wonder: Y5980
Splatoon 3: Y5980
Every Pokomon: Y5980
Mario vs. DK: Y4980

If you're shopping for a console and see the differences in game's pricing that will influence the console choice as well.

I don't think the disparity is a bad as people think with FF7 Rebirth. First, assuming digital tie is 50/50 then you have 500k opening.
Now apply the fact that they PS5 instal like 40% lower than PS4 when remake launched and you find that they performed about the same.

Heh, there a reporting error from the Washington Post on the matter, which was the article referred by most outlets. So far, the exclusivity deal is only known for Remake and Rebirth.

Also no details on how long this deal is supposed to go on. Maybe we're near past the timeframe for Remake to be ported on Switch 2 and Xbox ? It will have been 5 years in a year now since it's release. 

Anyway, Square Enix new CEO already announced their intention to stop going after those exclusivity deals, so unless Sony basically gives them a deal they can't refuse, despite Sony's last earning call which seemed dire, I don't think future decisions will be remotely close to what was done in the past.

Shouldn't you do the same exercise for the Remake release on PS4 since this suppose to compare it ? 

I mean Remake was released during COVID which was known to have boosted digital ratios for games at the time. So just with a similar 50/50 ratio on opening week, FFVII Remake would be about 1.4M.

Though I do think that ratio may be too unrealistic with Japan tendencies to prefer physical medial so. Around 1M-1.2M prolly sounds better.

In itself that number shows Remake to Rebirth would've decreased by half in sales on opening week. 

So let's entertain, the lower userbase argument even if I think it is flimsy. The numbers I'm using still would display about a 10%-20% decrease in copies if both user base were hypothetically the same.

Anyway, this is all just in theory really. To be frank, the longer SE will go on without announcing the game milestones, the longer it'll speak volume on it's actual performance. FFVII Remake had it's record breaking launch announced two weeks after it's release. FFXVI announced the 3M mark a week after it. The later hasn't received any number update since that announcement, but it's performance post was seemingly bad from the data we have seen. 

The good news is, if it is really that bad; we will see an FF Rebirth PS5 bundle soon.

Hardware sales are more than fine, because a significant number of these units are going to China. Last generation the PS4 had a 20k-30k baseline during its best times.

This week's hardware boost for the PS5 was certainly underwhelming, but it's clear that the baseline is distorted to begin with, so the traditional pattern of "big game release results in big spike for hardware sales" doesn't apply anymore.

Sony's main problem in Japan is that third parties haven't locked out Nintendo like in America and Europe. You'll easily find people who will say that Sony and Nintendo don't compete, but that's nonsense and the Japanese market shows it. All that Sony has left is the AAA level, but there's not much of that in Japan because most developers can't afford those budgets. Therefore the majority of third party games that matter (defined as selling 100k+ lifetime in Japan alone) are on Switch too, so gamers have the choice and Switch is the better console. The difference in graphics is often negligible, because as mentioned before, most Japanese developers can't afford high-end graphics for their games to begin with.

Worth repeating that a baseline of above 30k for the PS5 is better than what was expected going into this gen (the PS4 did not manage that). The PS5 was never going to have Switch sales.

I don't get how switch numbers are up in a week without new releases

I think it's best to wait and see how well Rebirth does next week to see if it gains a good hold. Perhaps it's overwhelming positive reception will have people want to try this game out. What I want to know is if this year will be the lowest in terms of hardware in a long time? Seeing as Rebirth didn't garner much PS5 sales and assuming there won't be a Switch 2 until 2025. Only way I can see this not happening is if they release a new PS5 model.