So they will never make an AAA game? Do they not want to make them?
Things have changed since 2017. They will never make many games at the same time again as sales have shown they failed. Shawn Layden noticed this failure and applies now to all studios to make few and larger games. It doesn't applies to only studios who have already done that since PS3.
Sony's Western titles have caught up in Japan and made Japan Studio's small games irrelevant this gen. Kouno's project they are excited about had to wait very long for full production until TLG was done in development. The producer teased at the end of 2016 to 4Gamer they had begun production on an ambitious title. Gravity Rush 2 went gold in Nov 2016. Only title they were waiting for to wrap up was Knack II did Allan Becker told IGN in June 2017. They will start up new titles for the future to use new technology. He didn't gave a precise number which is very interesting.
Mark Cerny said at E3 2017 that Japan Studio had now 250 people despite the hiring spree from 2016 and onwards. Sony is hiring every year now to fix this issue.
If you want results and new side of Sony's Japanese studios you have to wait until next gen. This gen was experimental and more about to cover up bases than deliver goods. Allan Becker started in April 2011 so he doesn't fix a mess over a night. He had Vita, PS3 and then came PS4 into account which showed him what did worked and what didn't worked.
First week in Japan
Freedom Wars 188,888
Bloodborne 152,567
As for current franchises
Gran Turismo Sport around 180k
Everybody's Golf around 99k
Everything else were below 90k and underwhelming performance. Never even made it to user's choice awards at PlayStation Awards. Japanese audience don't care enough about Sony's small Japanese games anymore. Ueda is done. Cellshading is done. Doll style is done. If WWS released a game like Xenoblade Chronicles 2 the audience wouldn't buy it and it would fail.
It's important to find the perfect balance for their Japanese games. It was easier to make Bloodborne with a Souls audience in mind, but for new titles it's very challenging to take risks towards Capcom, Square Enix, Tango Gameworks budgets.