In the past few years, Sony has treated the PS4 gen as their flagpole/legacy over anything else up to that point. Which isn't necessarily bad, but cutting off a lot of software is due to them not having a solution or service to keep that software relevant.
Nintendo will hand pick games that are guaranteed hits or very easy to port or dump. Microsoft has Game Pass and excellent BC software/engineering that keeps old games alive. Both of these solutions make money. Sony didn't bother with any solution.
If Sony had it's own Game Pass that had a rotation of PS1, PS2, PS3, PSP and Vita games, it would most likely bring in revenue. But their leadership said fuck it, it's too expensive to design or implement BC software for that purpose.