I don't think this is a big deal at all in the grand scheme of things, but I think it reveals a couple of things:
Japan's market is quickly becoming switch dominant. As seen with tales numbers, they also experienced a decline. Some people are making absurd claims like 50k people left because of the harem or cold steel being bad, but that seems like a very long shot sunken cost fallacy. There is no way 50k people dropped the game because of that. I think release window was a little unfortunate, but I think the platforms are very important and Falcom needs to address that issue.
Falcom are going to need to be more adaptable. Falcom are pretty conservative and let other companies take the risks on developing ports for the west, build games on outdated in house engines, and are just behind the curve in the industry. They probably are expecting these kinds of sales, but I think Falcom needs to start taking bigger risks if they ever want to grow and not remain stagnant or in a decline. Take some risks and have people involved earlier in the process and have an internal localization team. Actually try to actively market your games. I really don't agree with Falcom is a small indie company that can't afford to worldwide release. Yes that is true that they are a small company, but you need to start taking more considerable strides too achieve that goal. Having the current new game be 3 years behind is anti-hype and it creates this weird marketing buzz. All the buzz around people talking about the new game just disappears for years.
Despite all this though, I don't think this is as bad as people make it out too be. We won't really know for sure until we get the reports from the company later in the year.