Ah I get ya now. The post you were replying to was referring to both sectors which caused a misunderstanding.

There is and will be overlap in userbases, yes. 

But when one userbase is multiple times the size, there's still significant opportunity for growth. Obviously it's not realistic for every AAA Japanese game to be made for Switch, but they could definitely do better, especially once the successor arrives and decreases the power gap.

That is not a de facto rule at all.  You're forgetting the large number of people who would be interested in a game on the PS5, but will skip that game all together because it's on a platform they have no interest in.  In those cases, a version of said game on Switch would purely be added sales to the title's total and not taking away from a PS5 version whatsoever.

EDIT: An good example is RE4 on the GC/PS2.  Did the game being on PS2 take away from the GC version's sales?  Absolutely; especially because Capcom announced it shortly before the game released on GC.  But the game's sales were much greater overall thanks to also releasing on another console with a far bigger userbase.

Monster Hunter always sells really well in Japan on the Switch and Playstation.  If Square put a legit ground up Final Fantasy game on the Switch it would sell a lot of units in Japan.

I don't know how anyone can conclude that I'm forgetting this. The net sales of all versions combined would go up for sure (precisely because a segment of gamers will never buy it on anything but Switch) but by nowhere near the margins implied by the install base advantage. It's just not going to make a big difference for Japan against the world.

Switch's got a lot of late ports that ended up selling rather poorly considering its install base. The main reason is simple: "most" (not "ALL") people who were interested in the game got it on the other platforms before Switch became an option. Had those late ports launched on Switch simultaneously with the other versions, sales on Switch would have been higher, but at the cost of lower PS and maybe PC sales.

If RE4 launched on PS2 and GC simultaneously. GC sales (I bought two GC copies btw and one is still sealed lol) would have been a lot lower and PS2 sales higher for ultimately similar totals. But as far as 3rd party software sales (excluding Indies which are priced different and have their own little trends/patterns), Switch vs Playstation is NOT playing out like PS2 vs GameCube. Counting digital, a lot of multiplats sell fairly comparable numbers between Switch and Playstation in Japan. Perhaps over time, Nintendo's large playerbase will revitalize Japanese interest in some IP's. But as it stands, 3rd party sales are quite poor even on Switch, including multiplats that release day 1 on it.

Final Fantasy is a weak IP in Japan and the Switch alone can't reverse that. Monster Hunter remained huge on Playstation in a time when Final Fantasy was struggling.

If however the next mainline Final Fantasy is designed for Japanese players primarily AND is released on all major platforms AND gets received very well, then yes, it will sell a lot more than recent iterations and might regain its multi-million seller status.

Regarding that a Switch version of a game would not sell proportionally to its larger install base, I concede to that.  That wasn't the point I was making (sorry if my RE4 example mislead you).

What I was meaning to say was that companies cannot ignore the market leader anymore in Japan.  In  the past, companies have been able to roll with a PS3, PSP or PS4 version of a game that skips Nintendo's hardware completely without the threat of sales lacking too badly, simply because those systems were just more desirable to Japan for their time than the PS5.  Even the PS4 came along when it still meant something to own a dedicated home console in the face of Nintendo's handhelds.  But now that the Switch has given the region exactly what it wants all rolled into one, it makes the PS5 way less attractive.  And when the Switch 2 arrives, barring some major screw-up from Nintendo, PS5 will have nothing to offer that Japan cares about other than better graphics, which will lose to form factor big time.  Sony cannot win on price, its first-party IP's aren't popular there and the GTA6 effect won't save the PS5 in this region.  This is why I don't think that a Switch 2 version of a game will take away from a sale in the case of the PS5 - because, except for those who already own a PS5, few people will care to buy the game at all unless it's on a system they want in the first place.

By "not selling as well as implied by the install base disparity", I meant the typical sales difference between a game on a console vs the version on a multiple-times more popular console (Otherwise yes, software sales are never proportional with install base. All software will gradually have their attach rate reduced over the years for obvious reasons).

For instance: Ys X Nordics. A small budget anime-esque game with simple graphics, perfect for the Switch right? Well... in the first month in Japan (or two months?), it sold more on PS5 including digital than PS4 and Switch combined (It's one of only two games from which we can extrapolate Japanese digital sales), Nothing like this occurred on GameCube vs PS2. The reason is simple: Nintendo's third party audience has proportionally been very small when compared to Sony platforms. Most Japanese bought Switch for Nintendo games and indies, this is why it's not really blowing Playstation out of the water when it comes to multiplats where both platforms are generally underperforming.

Switch 2 is essential and will convert more Playstation players in Japan for the reasons you mentioned and other reasons. But there will still a large 3rd party playerbase on stationary platforms. PC is growing quite big in Japan and is also converting console player (PC + Digital is the giant missing factor in these reports), and PS5 would have done much better if pricing wasn't a complete disaster. Furthermore, I think portable PC's will eventually become popular, and Playstation will inevitably release handhelds in the form of optional SKU's.