Split-screen login issue on PS5 — second player logged as Guest after update

After recent updates on PS5 Bedrock Edition, split-screen multiplayer no longer works properly with two separate PSN accounts. The second player logs in, but is assigned as a Guest account (username(1)), spawns at world spawn without inventory or progress. This issue persists even after reinstalling the game and checking for updates.

The problem did not exist before. Many players are reporting the same issue across platforms. And the optimalisation is dramatic, game is very buggy, impossible to have joy from playing it, it lagging even when the settings are set on low