I think vertical integration tends to win when the floor is built atop of commodities. The new consoles have similar hardware[0] and it really comes down to allocation of those hardware resources, which makes first party studios ways to differentiate your product from the competition, as you can justify the extra cost to make sure your first party console is optimized for in its unique ways, where cross publishing houses don't always do that, for example. This can differentiate gaming experience, even for titles that are cross platform, if one is optimized for say, the Xbox ecosystem, but its PlayStation port does not have the same kind of optimizations. How much this matters may remain to be seen, for now.

Having highly optimized flagship titles though is what makes these vertical integrations so appealing in this market, in my estimation.

[0]: https://www.tomsguide.com/news/ps5-vs-xbox-series-x

FWIW I don't endorse everything in the link to toms guide, I just wanted a reliable source for hardware specs