They absolutely could. If they wanted to. As mentioned before, they have the engineers and ostensibly a full understanding of both their systems' hardware and software (that of the system itself i.e. firmware and bios and such). But I don't think they want to. Emulation is very complicated, and the more advanced the system you want to emulate, the harder is gets. Meaning it'll take time, energy and money, so with Sony being a corporation, it becomes a question of whether there will be a ROI for that. PS4 games is selling, so that's easily justified, especially since there hasn't been a deluge of PS5 games because of the circumstances, so smart move in hindsight.I still feel making a software emulator on the ps5 would be something sony could do. Might take a fresh program but since they control the original systems source code they should have any reason it is impossible.
But the others? PS3 would be the hardest. Vita flopped, so while it has its fans, it's just too niche. PSP is the better candidates, but why not do PS2 instead then? I mean, they sort of half-assedly tried already. Remember PS2 Classics on PS4? Yeh, those are basically just ISO's on an emulator with some game-specific tweaks running inside a wrapper. They did that for a bit, then quietly dropped the concept. If Sony has no interest in keeping up bringing select titles from the most successful console of all time to newer systems, what chance would there be for a general emulator on PS5 for any of the lesser gods?
Because it's not the games being emulated. Source code is ideally what you want if you want to port a game to natively run on another system (which is what Microsoft's doing for its bc on Xbone and beyond). All emulators for consoles I know of actually imitate that console's hardware, and in many modern emulators also the system bios and/or firmware. No game source code needed, since from the game's perspective, it is being more or less duped into thinking it's on "real" hardware, or at least something close enough that it'll run.I’m no programmer but always thought source code landed on the software side of things, which means that Sony would need to have code access to not just their own library of games, but that of whichever third parties they plan to invite to the BC party as well.
There might be other factors to consider tho. Like publishing and licensing agreements. I can imagine Sony can't just decide on bc for all third party games unless the contracts between them and the publishers stipulated they could. If so, all it would take for the whole thing to fall through is one major player saying no.