I don't have access to proprietary sales information. But the information supplied by Wikipedia, MobyGames and GameFAQs corroborated with data from Reddit and YouTube collectors suggests there were 4,104 PS1 games and 4,376 PS2 games. In the 7th generation there were 1,107 North American, 354 Japanese and 191 PAL physical PS3 games. You can choose to believe or not believe these figures, but they do conform to my experience as a collector of those era's. There appears to be a significant drop in physical games during the 7th generation
I don't want to get sideways mixing in NES games. I'm only wondering why there were less physical games in the 7th generation than in the generations before and after.
So far I've read suggestions that economic factors may have been in play. The 7th generation experienced the Dot-com bubble burst, the Sub-Prime Housing Crisis and the collapse of Wall Street. But physical games seem to have snapped back during the 8th generation which experienced a global pandemic that caused supply-chain disruptions with severe economic impact and yet had more physical games than the previous generation. Nintendo fans claim the Switch has 3,000 physical games already.
Another suggested that the difficulty programming for the PS3 may have lead to it's decline. But the PS3 and Xbox 3600 shared almost identical libraries in both titles and numbers - so nobody abandoned the PS3. I do remember reading about poorly optimized PS3 games though.
Not sure what the cryptic android suggestion meant. That developers chose to use their time developing games for cell phones instead of consoles? Maybe. There were plenty of games being released on 7th generation consoles, but they were mostly digital, not physical.
Maybe I'll never know why my PS3 collection is so small. I've gone over it three times now convinced I could add more games of the type I enjoy collecting and never could.
Wasn't the 7th generation when the game industry publicly called out the Japanese for making crappy games? Maybe that had something to do with it.