Yes, I believe this is a thing. I'm not sure why, but I think for game releases, especially hyped AAA games, your highest player counts are almost definitely going to be the highest in the first weeks of release, so that's the strongest impression. Almost all games see a steep drop off of concurrent players later on, then it stabilizes. Improvements later are thus much less visible, and all the players that got the bad first impression have little reason to go back. I think NMS particularly made a bad mistake compounding this by hyping up the game beyond what it could actually do when it was released - that's an unforgiveable sin to a gamer.

Stuff like this, it's why I often avoid big releases for the first year or two then go play it when it's on sale.

For another perfect game example - Star Wars Outlaws. Terrible, buggy release with obnoxious gameplay loops. They fixed it, now it's one of the better games I've played recently. You can go look up gameplay reviews from the last year to see people shocked at its reputation, it's a very good game now and arguably would have been a candidate for GOTY if it had released in its current form.

In general that’s correct and you can generally estimate sales over the life of the game before the the end of release day. But there are also early access games, which are completely the opposite. Not very much in between those two extremes though.

NMS really is an exception, that they sold well enough at launch that they can keep providing free major updates for 10 years.

No Man's Sky and Cyberpunk 2077 are actually proof you can have an awful launch and still pivot into a large player base and continued sales via updates.

Reception for both games is largely positive despite their poor initial response.