2. Most of the Tools and Library they used are on x86. Not only from MS & Sony, but also Game developers. It is going to take some courage to change all of that.
3. When the design of PS5 and Xbox X started, none of the ARM CPU IP design, ( In fact even as of today and next year, or may be even 2022 ) has a Single Core Performance that rivals AMD's Zen 2, and certainly not Apple's M1.
4. GPU IP, both are from AMD. Which may actually be more important that the CPU IP from a gaming perspective.
5. In case you ask why not Nvidia then since they made ARM SoC like those in Nintendo. Nvidia's pricing for latest Gen IP is way out of touch. Hence that is why you only see non-leading edge tech used in Switch. ( Nvidia is not a player that wants to sacrifice Margin for Market Share, which is actually a fair point )
If you wanted a high performance alternative to x86 in the past, you would have to go with PowerPC, which Playstation famously did with Playstation 3. Except that was a disaster because the architecture was too novel.
That experience made Sony, very afraid of doing anything unconventional hardware wise.
But I supposed Apple may have opened the flood gates and my prediction would be that next generation Playstation will be ARM based.
But it had nothing to do with PowerPC instruction set. Xbox 360's CPU used PowerPC instruction set too, but Microsoft went with much more classical 3-core design instead of single core + 8 SPUs that Sony used.
The only impact PowerPC had on game developers was making them aware of load-hit-store performance hit.