What does ending well for them look like? PS1 and PS2 sold really well, but Sony barely made profit in those generations compared to what they're making now, despite being dominant.
The company has to build itself a future and as such they need to be profitable in software and hardware.
If they can't, console gaming is cooked.
Hardware is the wrong place to look for profits. The vast majority of their revenue comes from software sales. Less hardware in the wild = less software sales. Simple as.
Usually the idea was to lose money from hardware but more than compensate it with software later, getting a net positive over years.
The thing is, in PS1, PS2 and part of PS3 they got that protitability from games, mostly in discs with a lower margin to put discounts there and bump sales.
Later they added more ways to get profits: a higher percent of game sales being digital, bigger digital discounts, game subs, addons and a richer amount of accesories.
So as a result, they are getting now more revenue and profit per user than ever and on top of that getting now way more off-PS revenue and specially profit. Even achieving the biggest revenue in a generation even if they are still in the half, or more profit than in all previous generations combined. Even if they also spent more in acquistions than ever before.
But they have the issue of hardware costs growing over time, unlike in all previous generations. So have to be careful because in PS3 gen the hardware costs did eat their profits.
They rised the revenue in all areas, and apparently also profitability too with the exception of hardware. We can see in the graph that they make more revenue and profit even if selling less hardware compared to previous generations. Thanks party because they're now also making money off PS via selling games and accesories in other platforms plus the off gaming stuff.
But still, they have to be careful with profitability of hardware (specially if inflation and costs keep rising) and also with their new first party games profitability (which every generation get more and more expensive, plus at the same time they develop more and more games at the same time trying to compensate that they also take more and more time to be made).
Yes, they have to figure out how to move more hardware, but have to consider rising costs and inflation while also not lowing a too big amount of money with each unit. And also have to control costs in first party games to be less risky for when they have to cancel a few from time to time, or for when a few of them tank from time to time.
Probably it won't be possible to cut down the console price, so maybe they can do something like to bundle a few months or a year of PS Plus, or a few digital games with the console to give it more value and get perceived by people as cheaper.
Regarding AAA games, I think maybe it would be a good idea to make a bigger portion of their open world games shorter, using in some of the mainline sequels the length of games like Morales or Lost Legacy. And after having made the push for GaaS, now made a push for smaller scale games like Astro Bot and Lego Horizon. The idea would be to keep the big ass open worlds and GaaS titles being only a quarter or so of their lineup. A quarter being smaller games like Lego or Astro (insert here Media Molecule too with stuff like Tearaway) and then the half being Morales/Ratchet/Returnal/HD2 like sized games.
I also think that they push harder in the movie, tv shows and anime (where's my Bloodborne/Wipeout/Loco Roco/Gravity Rush/Astro Bot anime?) area. There's a lot of potential there to monetize and expand the audience of their brands outside gaming, reaching new potential future players. I also think they also have to make a bigger push in other non-gaming areas like model kits, figurines, toys, apparel, comics, books, audiobooks, art exhibitions, etc. plus also these Hero Project initiatives to fish some interesting exclusives plus to further grow specially in emerging markets.
