1. Quirky Japanese games have gotten the axe from Jim Ryan. Japan Studio has been shuttered. KojiPro walked to XBox. Sony has invested exclusively into western (N American + European) studios. The market has long overvalued Japanese games and PlayStation finally adjusted.
Lies. Ryan signed a deal with Kadokawa, signed exclusives with Japanese devs, said to be strengthening bonds with devs and publishers from there and said PS5 will get more (worldwide) exclusives than ever. They released a Astro last year, Death Stranding Director's Cut this year and will release GT7 next year. Signed many 3rd party exclusives like Guilty Gear Strive, FFXVI and many more.
They restructured Japan Studio changing their leadership after decades of unsuccessful games, focused their internal development merging their different internal teams into one of them: Team Asobi (and rebranded it). And separated their XDEV Japanese 2nd party publishing team to be now under XDEV (as happens in the rest of the world) instead of under Japan Studio. Both Team Asobi and XDEV Japanese teams are highly hiring to grow after restructuring, as is Polyphony and the other Sony teams.
So they didn't shut down Japan Studio, they restructured it. They did shut down Liverpool Studio, Evolution, Big Big, Incognito, Guerrilla Cambridge, Manchester Studio or Zipper for being losing money and not making hits during way less time than Japan Studio.
Acquiring Firesprite+Fabrik Jimbo and Hermen basically did was to resurrect Studio Liverpool and Evolution (+ Bizarre Creations) since many of their former coworkers are there, in a now way bigger studio of soon 300 people (have 256 people + 40 open job positions).
For indies / very small 3rd party games (not only for Japan), now exactly like Nintendo or Microsoft, instead of publishing themselves as 2nd party and keeping their IP and the exclusive forever, they decide to keep the indies selfpublish it, keep the IP for the indie and only ask them for a timed console exclusive. Because in this way it gives way more revenue for the indie so the relationship is more healthy for them while the 1st party still gets the PR benefit.
2. Multiplayer. The PS4 went 7 years without a single AA or AAA multiplayer exclusive. PlayStation is now flush with AAA multiplayer projects in the pipeline all set to release in the first half of the PS5's life. Firewalk, Deviation Games, Firesprite and Haven Studio are all new partnerships with heavy multiplayer focus. Every single one of PlayStations AAA studios (except for SSM) is now hiring for multiplayer developers. Naughty Dog is making its first ever standalone multiplayer. To go from 0 AAA multiplayer games in 7 years to having more than 10 scheduled in the first half of PS5's life represents a Sea change in philosophy. Moneyball philosophy.
More lies.
Regarding their future games, we only know that a few of them will be focused on multiplayer. There are a few other games that we know they will feature multiplayer due to a job offer, but it may be only for a secondary game mode in a single player focused game as happened in many of the games they released in this 7 years (PS4 generation) like Uncharted 4 or Ghost of Tsushima. Combined with some more focused in MP like GT Sport.
As an example (won't list all the ones for the 7 years) Ghost of Tsushima, Sackboy, Destruction All Stars, Dreams, Predator: Hunting Grounds, MLB are some of the games with multiplayer they published in the last year or so (you could in some way to include Demon's Souls or Death Stranding as some sort of weird multiplayer). They also get 3rd party exclusives, some of them being multiplayer like Guilty Gear Strive or Street Fighter V.
3. High skill floor games. We can disagree about how successful Demons Souls + (less so) Returnal was. I think we can agree that Sony probably wants both studios next projects to sell more than 1.4 million and 600k. Jim Ryan doesn't seem like a gaming romantic (like Shawn Layden). Those numbers probably don't excite him too much.
Facts say the percentage of consoles that bought these games is way higher than usual in this type of niche games. Their publisher mentioned them as successful titles (or IP in case of Returnal) and they are so happy they even bought these studios.
In total sales the number as of now is low but it's because they are exclusive for a recently released console that still has a low userbase. Over time the console will sell way more units and the games will get discounts, so they well continue selling. But even considering that, for these types of games these sales are good.
As an example, Bloodborne sold 2M copies in half a year or so exceeding Sony expectations, and this was in 2015 when PS4 had an installbase of around 30M. Demon's Souls instead of a brand new game is a remake (which means less apealing for sales and cheaper to develop so more profitable) released at launch and achieved 1.4M when the console has ~10M sold. This means Demon's Souls first half a year has been way more than the Bloodborne one. And obviously the game will continue selling, won't stop here.
How do you explain the abrupt departure of Shawn Leyden if all Sony was going to do was "stay the course". Could it be that Sony knew a strategic shift was in order and Jim Ryan was better suited for it?
He's 60 years old, the executive side of huge corporations is too stressful and to make games is too stressful. It was time for him to move away to something smaller and more relaxed before completely retiring.
He quitted after being chairman/CEO of Worldwide Studios for a year and a half, so his influence in long term strategy was limited. Before that he was in charge of SIE America, not the worldwide SIE or worldwide studios. So he was mostly a PR face for the E3 and interviews and was in charge of shipments, marketing or sales for USA. He wasn't making the worlwide decisions for SIE worldwide or Worldwide Studios when he was in charge of SIE America.
The strategy with Ryan and Hermen is almost exactly the same Sony had before them. In terms of hardware, services and OS make something dev friendly easy to program for but powerful even if keeping it at a decent, appealing pricing and focusing on tweaking/fixing issues of the previous generation while adding some requested (by devs or players) or nice additions.
In the game side, to keep betting on a lot of different type of games for 1st (and 3rd party) exclusives: big and small, a lot of different genres, mainstream traditional blockbusters or weird/unique stuff, sequels and new IPs, single player and multiplayer, betting hard 1st party and 3rd party exclusives, keep growing internal teams and acquire long term partners with a nice relationship with them, continue focusing on sales for your console but investing and growing in areas to grow (VR, game subscriptions, streaming, mobile, movies, PC). They also make marketing deals with top multiplatform games that dominate their genres (CoD, Fortnite, GTA, etc).
The only difference is that now Ryan and Hermen have more money available because PlayStation generates more money, so they are reinvesting more in all these areas. And since they are bigger, to expand they need to invest more in the new (for them) things than they did before.