Japan Studio will continue to exist but in a different form than we know it today, most of the staff will be transferred to the ASOBI Team and will take care of the Astro series while activities such as localization, choice of external studios with which to collaborate and IP management will be carried out globally by PlayStation Studios.
Sony therefore changes the structure of its historic Asian studio, which opened in the early 90s to support the launch of the first PlayStation. The Japanese company motivates this choice with the desire to make the team leaner and more prepared to respond to the challenges of a constantly evolving market.
Team ASOBI as mentioned will carry on the Astro series (after all Astro Bot Rescue Mission and Astro's Playroom have enjoyed considerable success) while apparently there will be no more space for other internal projects developed directly by Japan Studio. Many key figures have recently left the company, including Bloodborne producer Masaaki Yamagiwa as well as Teruyuki Toriyama, the team's leading name and creator of Silent Hill and Gravity Rush.