I think their current strategy is already going to affect console sales in the last quarter of its lifecycle, when the console should be at its lower price. By then, their catalog will already be available on PC too.
MS's issues ran since the second half of the 360 (Sony has never shown that level of incompetence). But while Sony can defiantly muster losing money like in the PS3 era, if necessary, they are clearly less willing to do so now. This is why I usually refer to Concord's failure as a $5 billion disaster, which, by orders of magnitude, could very well be compared to MS acquiring ABK.
You talked about Xbox games declining in quality. I would add losing relevance too.
But there is definitely something happening with Sony's AAA games... they feel too homogenized, too samey, too damn "focus-tested"... very Ubisoft-like, of course they still have a "Director driven feel overall" but in terms of game desing i think they getting.... boring.
Intergalactic's reception (overwhelming rejection) should also make PS very nervous. Outside of the woke controversy, it just felt flat, uninspired, devoid of... "gaming magic" and instead, Hollywood-esque in the worst way possible. (Something that Kojima is able to pull off.)
Forbidden West, Ragnarok, and Spider-Man 2, while successful, I think the "buzz" afterwards has felt tepid or less exciting
And Sony is able to endure this because of the 30% cut they get with every transaction. Going day and date will definitely negatively impact PS's virtuous cycle.
So yeah, it will be a risky move. But I mean, Sony has the data; they have a case study with Xbox. Maybe they can succeed where MS failed... supposedly, Hermen is trying to figure out a new way to run the PlayStation business...
Let's see what conclusion he comes up with