If it was ultimately about lack of staying on schedule, then upper management should've been changed, not gutting the majority of the talent. Because there was clearly talent within Japan Studio
They changed part of the management around 2019 (this is when Doucet became Studio Head) and then another part when resctructured it in 2021. I'd say the issue maybe was profitability during decades instead of not meeting deadlines: it's ok if from time to time some game tanks and doesn't end being profitable, gets cancelled or delayed. This happens to everyone.
Seeing that in 30 years they never had a sales hit, and instead had some games with bad reviews, several cancellations and at least a handful money pits due too long delays, pretty likely the higher ups ran out of patience and decided it was needed to clean the house and shake the things a bit witht the restructuring, rebranding and new offices in that same building.
Looking at the first results in Astro Bot or Stellar Blade, I think they did a good job.
When the closure was announced,
And they were still wrong for killing Japan Studios no matter who hard you try to justify it.
If Japan studios were profitable for Sony they would never have closed down.
Reality is Japan studios were bleeding money before they closed down.
There was no closure announcement because there was no closure. They made a restructuring and rebranding instead, as already did many years before. Do you think that Astro Bot, Death Stranding Director's Cut, Stellar Blade, Rise of the Ronin, Convallaria, Lost Soul Aside, Death Stranding 2 or Physint grew on trees or what?
Seeing them get shut down, coupled with the growing Westernization of various Japanese games and growing Western dev influence in the gaming space, it's all of that combined which amplified reactions towards Japan Studios getting shut down, especially considering they were a PlayStation 1P dev. You need to take a step back and realize that it's not always about sales or what's best for the profit margins as dictated by CEOs and bean counters; at the end of the day this is an artform and teams like Japan Studio contributed a good deal of value towards it in ways that benefited from direct ownership under a platform holder.
They weren't shut down, they were restructured. Since the restructuring they developed internally Astro Bot and published/manage/supported the Asian 2nd party games Death Stranding Director's Cut, Stellar Blade and Rise of the Ronin.
Sony always made sure their consoles had a great catalog that covers most niches via 1st, 2nd or 3rd party games. In the past, it was difficult to publish, so Sony published more external games made by smaller teams. Currently is way easier, and devs prefer to self publish and keep the IP for themselves, in addition to have timed console exclusives and not full exclusives. It's also better for Sony, because these small exclusive games still do their same job at a much cheaper price than in the traditional full 2nd party exclusive, so for the same money can get more exclusives. So Sony does deals with them via PlayStation Indies, more focused on helping them in marketing or depending the case funding or some kind on support (porting, localization, etc).
In the past, when games were way cheaper, it was profitable to make games that only appealed a small region as could be Japan. Nowadays, games are very expensive so they have to appeal a bigger, global audience. This is why some of them are now more 'westernized': they try to make the game more appealing to a wider audience.
As company you have to pay the bills and keep the investors happy, so you have to keep a sustainable business. In the Maslow pyramid, you first need to cover the basic needs to keep the stuff sustainable. Then once you have this covered and secured, it's when you can go for the self realization / artform.
...Also I see you're trying to undercut the value of whatever Japan Studio presented to SIE by mentioning they didn't "directly" develop some of the games they were a part of. At points almost sounds like you're trying to bargain them down to a consultancy position. Funny...I'm pretty sure when people use this same tactic to downplay SIE's involvement in games like Rise of the Ronin or Stellar Blade, you are among the crop who are quick to correct them.
Since the 90s they had two parts: one that internally develop their own games and another one who managed the external development of 2nd party games they published and were developed by external (meaning not owned by Sony) teams in Asia.
The publishing of externally developed games (2nd party), includes not only funding and publishing, but also in the production side to make sure they keep achieving each milestone, and also providing them any help they may need with support teams available at Sony or via outsourcing.