I'm also willing to guess that the increased focus on cosmetics for scratches isn't just to squeeze whatever's left of the playerbase (although that's definitely part of it),
I think they've always had a pretty strong reliance on cosmetics. To be honest, it's one of the main draws of the game, and I think other elements of even base PSO2's design support this. I'm going to use this as an excuse to pivot into talking about how we got here and how it impacted the game because there's nothing worth discussing coming up in NGS right now. It's not really a reply to your post so don't feel like you need to read all of this dfghjdfgh
In PSO1, people quite liked idling in the lobby and using it as a chatroom with their own custom anime characters, but y'know. It also had a lot of people who just treated it like Diablo 1 and put gameplay first, with gameplay systems to support it. The style kind of hits a perfect ground that appeals to a wider audience and cements its place in gaming history globally. You talk about Phantasy Star and chances are people are gonna be like "OH YEAH I loved that game on dreamcast/gamecube." When PSO2 was announced, and even during the long stretch of no localization, the casual consensus on these forums and their equivalents was still just "man i loved the first game it sucks we cant play the sequel"
In PSU... there's even more potential settings, more customization, and more to get attached to in regards to your own character, who can now (in theory) play every class, but at this time they didn't fully understand their audience yet. The overall tone of the game was very... shonen-like, strangely enough? At least with the story. It was initially supposed to be a much darker, more somber game, with a lot of PSO ep 3's music (
including the main theme, shockingly enough) being originally planned for use in PSU, but lord knows what went on with the people calling the shots here. It was 2005-6 era SEGA. PSU didn't go over well, and damaged the brand in the eyes of most. "We just want more PSO" was a common sentiment.
With PSZ and PSP2 around the same time, they tried two different approaches, elementary school kids and horny young teenagers. PSZ failed, effectively dooming PSO style gameplay. PSP2 was a pretty big success for them, and PSO2, which was in the works at the time, seemed greatly impacted by this. Let's take a look at PSO2's earliest known footage!
View: https://www.youtube.com/watch?v=h-FPk-u-FqM
As you can see, it was a bit more militaristic in tone... you're fighting with steel military weapons against giant bugs attacking town. Fairly grounded compared to what it'd turn into past episode 1! It also makes the class designs also click a bit more, even if a lot of them were very tacky and all but 2 female designs had a mandatory thigh window. They wanted more metal plating and for you to be more of a "soldier" than a "hunter," or at least that was my read.
Then you have PSP2 and 2i's success, especially 2i's, with them finding out their biggest source of potential money is via cosmetic microtransactions vs the old sub fee method. They also realized
who was paying, so they quadrupled down on that, with each episode descending further and further into just making it the generic sci fi otaku IP that has every trope that one could possibly want. I suspect this played a large part in their decision to not localize it, at the time, as it went REALLY heavy on a specific subset of players in Japan.
What I wanted to talk about the most though was how this bled into the design of the games, the "social" aspect of it! It's always been a part of the series, but it hasn't ever really been properly capitalized on beyond PSO ver 2's introduction of lobby soccer... As PSO2 episode 1 progressed, they started pushing it more and more toward the urgent quests having all of
the best drops and rewards. As-in, other content actively started becoming meaningless, with the common areas falling off for the most part (a few exceptions here and there, incl. COs.) I think this was on purpose. They could show up both scheduled and unscheduled, so you could plan your play session around the scheduled ones, then hang around longer for unscheduled UQs/EQs in between or after.
Basically, lobby gremlins got extra opportunities to get the best rewards in the game and... well, the best opportunities to play the game at all, really, since past a certain point there wasn't anything worth
doing beyond UQ/EQs. If you're idling in the lobby, you might as well chat with the others and show off your avatar, the representation of you and your interests that you've likely invested significant time (and maybe money) into. For the longest time, I didn't realize this and thought PSO2 didn't have content simply because they were bad at planning. Maybe for episode 5 that was true, but for most of the game? I think they wanted it this way. Who are you showing that avatar of yours off to if you aren't hanging around in the lobbies???
I think it's ironic that, even though this worked quite well, the most common piece of feedback from all regions for NGS was "please don't put urgent quests in the game." I don't think anyone really enjoyed the way they structured the game, but endured anyways because they liked their avatar/the gameplay. Now NGS bungled the gameplay, and their attempted solution was "we should focus more heavily on making social better so we at least keep the people who pay." Maybe this is working on Japan...????? I sure do hope they don't waste their next attempt trying to chase 2014 again, though.