Sony brought this on themselves.
They decided to focus on walking simulators literally any studio can develop as opposed to a wide variety of exotic content from the orient 
Sony has this weird idea in their head that console gaming can be a sort of 'premium entertainment' while the Xbox Series S and Switch fly off the shelves.
Microsoft has been slowly eating away at them for 2 decades, stealing all the PlayStation exclusives like Final Fantasy and Tomb Raider.
The biggest difference between Xbox Series X and PlayStation 5 is a $60 removable cover and some PlayStation 4 games that run better on PS5. 
The Playstation brand is still massively strong in the hardcore gaming sphere, and built on the prestige those daddy-oscar-baiters bring in.
As long as they aren't idiots clinging on to the idea of "selling the box" for the next 20 years, they are not in a terrible position.
But they know this and they already started to loosen up the grip, with big titles coming to PC.
The aim is to make a profit and grow, not destroy the competition.
When the future will offer the possibility to play XYZ in 4K on any device (phone, TV, PC, etc) through 5G and X-cloud-like services, you can't expect to still be selling your very specific 500€ box to that many people.
Not an immediate future, granted, but you gotta prepare for it.
They need a very strong software storefront yesterday, and it's not going to be PSnow or PS+ in their current state.