It’s legally required by Sony, Nintendo, etc

Exactly what I'm saying. It's a completely dinosaur idea. There is no need for them to do it.

Probably makes emulators take a bit longer to come out. If they were open I'd expect emulators to come out before the consoles did.

Emulators don't stop them from selling games really. That whole paranoid lock-in mentality isn't helping them. Sony started to realize that to some degree and now sometimes even sell their games on GOG.

Steam Deck basically uses Linux with open stack to run games and is selling like hot cakes.