Wouldn't it be both then, since not being given enough dev time is an industry-wide issue across many studios and engines, but we're primarily seeing performance issues to this degree mainly from UE5 games as of late? With some exceptions.

Reminds me a bit of PS3. Games had the potential to perform great, given enough development time.
But should Sony have built it that way when they should have known that most publishers wouldn't find that worth their time/money?

I am not convinced that UE5 games are exceptionally worse performing when looking at the proportionality of releases with current generation rendering features. 

It just happens to be the case that most games pushing the boundaries are using UE5 and there are therefore more examples of poor performing titles to choose from. 

For example, Alan Wake 2 was developed with Northlight Engine and also had significant performance issues on most platforms upon release. 

Star Wars Outlaws is a similar situation with Snowdrop. 

Doom Dark Ages uses Id Tech 8 and a similar situation.

People are just comparing 9th Generation titles to mostly 8th Generation and cross-generation titles when it comes to performance and wondering why a game engine tailored toward expediting 9th Generation rendering features has comparatively poor performance on current generation hardware.

This.  People want 8 year old GPUs and 5 year old consoles to run modern games well..  those days are over.  We are in the mist of a sizable graphic jump in the next couple years.  Snake Eater is just the start.  

I do kinda feel like stuff like Nanite and Lumen, while they do look awesome, are kinda a bit too ambitious for current console hardware to run in a performant manner, at least as long as devs insist on shooting for 60fps.

UE4 had a similar issue last gen where games pushing its features often fell below the usual standards of 1080p on PS4/900p on XBO cos they taxed the hardware so much.

That could be a plausible explanation.

Would be interesting to see someone make a comparison of other engines being used to push high fidelity during a similar timeframe relative to hardware age for the past few generations, if such a thing is possible to make.

By this point in the 7th gen, we had engines like UE3, MT Framework, and Dunia pushing PS3/360 pretty hard.

This time last gen, UE4, Frostbite, and id Tech 6 were putting PS4/XBO through their paces.

Would like to also say that for all of the faults of UE5, I don't think a game like Clair Obscur: Expedition 33 would look as beautiful as it does with as small of a team that made it, if they used another engine. 

For example early on in the game (I haven't gotten too far) there are some beautiful dynamic/semi-dynamic water effects that reminds me of the Fluid Flux plug in, and I wouldn't be surprised if they used that plugin in the game. Although UE5 gives you a lot of tools to do semi-realistic dynamic stuff like this even without plugins. 

I use that plugin in the rivers in my project, and after about a 5 hour learning curve, it works really well. You just have to be strategic in how you use it, because it can trash your CPU/GPU resources & eat up your VRAM if you over use it. 

Yeah the engine can definitely deliver great results when devs make the right calls and have sufficient time and resources; games like Hellblade II look phenomenal on it.

It kinda reminds me of UE4 on Switch 1, where it could produce good results when done right (Pikmin 4, Ace Combat 7, Bright Memory Infinite, etc) but a lot of the time it over-stressed the system resulting in poor image quality.

I think the problem is game engines are outpacing hardware.  Which is why I don't believe we are hitting diminishing returns.  Hardware has gotten scare at a reasonable price because of AI data centers and crypto currencies.  

I like my ps5 but it is based on 2018 GPU...  pushing a decade old.  

I used to believe in diminishing returns until I went PC.  

Silent Hill f

"It doesn't have the typical splotchiness and temporal noise that we're so accustomed to with UE5, with no stutters. You almost wouldn't guess that it's a UE5 game" - John Linneman, Digital Foundry

When not having usual UE5 crap in your game becomes marketing on its own.