Because Sony was not giving them much to do in the first place later in life. JS ain't perfect and made their own mistakes, but those guys and gals were always willing to work. The only reason they became so inactive is because Sony gave them nothing to do or not much. Sony became hyper focused on either God of War, cinematic FPS games like Kill Zone and Resistance, Uncharted, Infamous (for a time), and now "Blockbuster and Cinematic!" 3rd person action games, shooters, or open world games. Most of these games are great, but the formula will wear thin at some point.
Will it? The Ubisoft style open-world game is a well tread formula - one that is famously criticized for being stale - but that didn't stop
Horizon: Zero Dawn and
Ghost of Tsushima from becoming a big success. Any formula has the possibility of getting stale, but so far the response to a new
God of War and
Wolverine game (which I'm assuming is going for a similar cinematic route) seems to be a very positive one.
The
Souls games have operated under the same formula since
Demon's Souls and fans still can't wait for
Elden Ring. I think it just depends on the audience a formula is geared toward, whether you use the formula to present some new IPs, and just adding a few little changes here and there.
H:ZD was basically a Ubisoft open-world game, but hey look, giant robot dinosaurs you can fight.
Ghost of Tsushima the same, but you're a samurai.
God of War '18 was cinematically not dissimilar from
Uncharted or
TLoU, but they made the combat kinda
Souls-like and gave the gameworld a
Zelda-esque structure. Even
TLoU2 embellished on the usual linear game formula.
I think a real issue for Sony might be how long they can push the graphical realism in these blockbuster games to keep up with the advancement of technology until it becomes unsustainable. But then I thought the same thing back during the PS3. There is the fact though that, while these games are great to play, they ARE sold to the average consumer on their graphical realism, which has the potential of eventually eating its own tail.
True, but they can and will screw up at some point, or them doing "Blockbuster Games" will bite them in the ass at some point. The only reason they don't see it now is because they are riding high on their success, again. Smaller games are just as important, even more so under many circumstances.
I don't know how much that would stand out in the current indie space though. I mean, we're living in a world where just on the indie side one wouldn't be able to play everything currently available if they lived to be 200. Sure, most if it is crap, but still, the output is stagering. What made Studio Japan stand out back in the day is that they were making games nobody would really bother to make. Now though, it's pretty common for games like
Papers Please and
Return of the Obra Dinn to get made (which I haven't finished because, again, there's just so much to play now). On that front I think we have more than enough options.
Also, we did get games like
Returnal and
Astro's Playroom, which I feel fit the 'AA' stamp.