As Genshin Impact's fifth anniversary draws near, it's clear that HoYoverse has big plans in store for their most prolific game. The Song of the Welkin Moon arc has only just begun with the Luna I update, but it's a strong indicator of where the developers plan to take Genshin in the coming years.
Surface-level improvements include more expressive character animations, more visually distinct playable areas and NPCs within the same region, and being able to interact with playable characters in the open world via the Anecdotes system.
Chances are that there are behind-the-scenes upgrades too as new characters are starting to get their own unique elemental sub-reactions, bosses are getting more complicated mechanics, and there's even going to be a brand new game mode called "Miliastra Wonderland" where players can create custom game modes and maps for others to enjoy.
Given that Genshin's Luna I update comes with the caveat of ceasing operations for the PS4 version of the game, it wouldn't be too much of a stretch to claim that it is also a modernization package in disguise. While the limitations of mobile hardware will likely prevent the developers from going too crazy, this does suggest that HoYoverse wants Genshin to be their "big tent" game with a bit of something for everyone.
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Ironically, the biggest speed bump in Genshin Impact's new era is going to be HoYoverse itself. Currently, HoYoverse is running five different live-service games at once. When Honkai: Nexus Anima releases in the future, there are going to be six concurrently running live-service games that will likely have a significant amount of audience overlap.
Most of the promotional material for Nexus Anima shows that it's going to bring together characters from all of HoYoverse's IPs. The obvious problem is that with six different games running at once, fans are going to have to start rationing their time more aggressively.
Of course, no one is forcing anyone to play all six games at once. If we are limiting the discussion to Genshin Impact, Honkai: Star Rail, and Zenless Zone Zero, one can feasibly play all three without much trouble. That's (presumably) not an entirely realistic picture of the games' audience though. Chances are that most people are playing other games at the same time.

Genshin Impact | Farming Isn't Much, But It's Honest Work
HoYoverse would probably love it if people took breaks from games developed by other studios, but that seems unlikely. Even with the Luna I update, Genshin retains some odd mechanics that other HoYoverse games have seemingly abandoned. The most annoying example would probably be how the developers insist on locking character and weapon upgrade materials to certain days of the week.
Smaller, otherwise inconsequential annoyances build up over time as well. Genshin still lacks a stamina overflow mechanic. You have to manually convert resin to Condensed Resin, albeit at better rates with the Luna I update. You can't directly upgrade lower tier materials into higher tier materials from the character screen. There's no way to downgrade higher tier materials either.
There's also the fact that you have to manually collect character level-up materials, another practice that has been minimized with HoYoverse's subsequent games. Granted, this is more of a quirk of open-world games more than a fault of Genshin itself, yet all signs point to Honkai: Nexus Anima having its own open-world portion to some degree.
If Honkai: Nexus Anima is swooping in with its own open world with potentially improved comparable features, then Genshin's main selling point might start to look like an inconvenience. People will still play Genshin for the story or the user-generated content, but if building characters becomes a hassle, then they might not really bother with farming enemies and collecting random flowers.

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If people aren't putting in the effort to build characters, then that would imply that they don't really need to play the endgame modes to completion, and if they're not playing the endgame modes, then there's less of a need to pull characters. Pulling characters for their open world mobility is an option, although whether this represents a sizable portion of the audience is anyone's guess.
Something has to make way eventually. Honkai: Star Rail's combat can be entirely automated. Zenless Zone Zero's non-endgame activities let you spend an entire day's worth of stamina in literal seconds. You could build up endgame-ready characters almost passively in both games and then focus on the story or events. Genshin has no such luxury, and it's starting to become quite noticeable now thanks to both Imaginarium Theater and the Luna I era of boss mechanics.
It's not as if HoYoverse is allergic to porting mechanics from one game to another. The ability to build your own Artifact didn't originate from Genshin, and Genshin's improvements to the mechanic has made its way to other HoYoverse games to some degree. The same goes for the in-game character guides and the Anecdotes feature.
Alternatively, HoYoverse may be counting on Honkai: Nexus Anima to pressure Genshin's player base to spend more. If there's less time to play, then people might be willing to part with some money to bypass the more tedious activities so that they can concentrate on story and endgame activities. The mechanism already exists in the game, people just have to be desperate enough to spend.
Genshin Impact | Hold Up, Let HoYo Cook
None of this precludes the existence of a middle ground. Honkai: Nexus Anima may have open world elements, but its core gameplay loop appears to revolve around minigames and autochess. Neither particularly encroaches upon Genshin's territory, and it's hard to imagine a scenario where autochess requires any huge commitment of time or attention.
Furthermore, as we've seen with the release of Honkai: Star Rail and Zenless Zone Zero, people can just bounce around and take breaks whenever there's a relative lull in content. You might miss out on some premium currency or an event here and there, but if you're planning to play these games over the course of years then it's almost irrelevant.
Regardless, HoYoverse might want to consider ironing out some of Genshin Impact's more annoying quirks to keep people happy in the long run. The Luna I update is certainly a step in the right direction, offering both meaningful content and mechanics that can be used to reduce the tedium of farming (albeit only in the current event).
The real test would be when Honkai: Nexus Anima releases. Will people stay with Genshin Impact in spite of its somewhat archaic approach to character building, among other annoyances, or will Honkai: Nexus Anima be a good enough open-world replacement? Or will both games be able to coexist? Even if players can manage with an additional game, what about the next game, or the one after that? Only time will tell.