I'd go further and say both Sony and Microsoft have been crashing since they decided the direction for their console is the "all-in-one living room entertainment box", rather than a fucking video game console. Microsoft was just spiking into the ground at a much faster pace.
Meanwhile Nintendo is out here thriving because they haven't forgot people just want to play goddamn video games.
And after the announcement the Switch 2 is on the horizon today, and with it confirmed it's fully backwards compatible, I expect the gulf between Nintendo and the other two to keep widening.
It's pretty amazing how abysmal the software sales have been. Sony's best selling exclusive is Spider-Man 2, which hit 10 million copies a few months ago. With ~50 million PS5 consoles "sold" (sell through is a fun term), that means that their best exclusive can barely push a 20% acceptance rate on their base. This is an absolutely horrid ratio, especially if you look at historical best-selling software/console sales like Halo 3 on the Xbox 360 or Super Mario 64 on the Nintendo 64. Even the Nintendo Switch, which has sold a staggering 140 million consoles, has multiple software titles that sold more than a 20% ratio, which is 28 million units.
Smash Ultimate = 34 million (24%)
Animal Crossing = 45 million (32%)
Mario Kart 8 Deluxe = 62 million (44%)
How about the rest of the PS5 exclusives? The only data we have on FF16 is that it sold 3 million units in its first week. According to the Insomniac leak, Demon's Souls sold 1.8 million units and Returnal only sold 866k units. What about their big selling titles like Ragnarok or Horizon Forbidden West, which sold 15 million units and 8.4 million units respectively? Those were multi-plat with the PS4, so that's another 117 million consoles to compare against (granted some of the PS5 already had a PS4). So if we just look at the PS4 for those 2 games, that's a 12.8% and a 7.2% acceptance rate.
Even with ridiculous development budgets, the PS5's exclusives are not selling well, hence why they've been porting to PC and trying to get the PC crowd onto PSN. The Playstation and Xbox are largely being used as a streaming box for Netflix/HBOMax while they can play their normiecore like Call of Duty or FIFA. People that actually want to play games are doing it on PC or the Switch at this point. This situation is going to look even worse for Sony when the PS6 comes out because that's when the Call of Duty deal ends and they're going to lose some people because of that.
Microsoft and Sony have killed their consoles and that's why they've been making moves to leech off the PC market. We already know Microsoft's gameplan is GamePass on the PC but it definitely feels like Sony was trying to boil the frog and get people onto the PSN network so they can force them to pay for PSN+ down the line.