Compressed assets use
less RAM, not more, until they're unpacked (and then the compressed data is discarded anyway since you no longer need it). And if you need unpacked assets, you're using that memory anyway whether compression was involved on disk or not. If memory is
really tight, you can get clever and start discarding compressed blocks as they're decompressed so you never end up consuming more than the uncompressed data size, plus maybe a few kilobytes for the last compressed block. But that's something you'd only really need to worry about on, say, PS2-level hardware where you've only got a few megabytes of RAM. Once the OG Xbox arrived with 64MB of system memory and the PS3 arrived with 256MB of system memory, this stopped being a concern.
And I cannot emphasize enough how little CPU time is required to decompress data compressed with most common algorithms. Obviously lzma and lzma2 are slow going in and out because they focus on high compression ratios above all else, but others (like
lz4) are optimized for high-speed decompression (see
this benchmark where lz4 spent 0.4 CPU seconds to decompress a 445MB file on a 2.67 GHz i5; the CPUs in the current gen and next gen consoles are faster than this).
It is literally faster to stream compressed data from disk and decompress assets into memory on the fly than it is to just pull in uncompressed data. Keep in mind disk I/O isn't "free" either. It takes CPU cycles too, and in fact I/O is a blocking operation (so the CPU spends some time in "iowait" state waiting for I/O to finish -- that's time it can't use for anything else). Given the same amount of wall clock time, you'll end up with more of your data in memory if it starts out on disk in compressed form than if it's uncompressed.
In the above benchmark, the uncompressed file size was 445MB and it compressed down to 159MB, or 35.6% of the original file size (lz4_hc improves compression ratios even further and still decompresses at the same speed). Loading that compressed data from disk takes just 1/3rd of the I/O activity as loading it in its uncompressed form. lz4 decompression is so fast (described as "multiple GB/s per core (~1 Byte/cycle)" by its developers) that it can decompress data faster than it can come in from the disk, even if it's an SSD. I'd be willing to wager this remains true even with the PS5's "super-mega-hyper-ultra-awesome" SSD architecture. It doesn't matter how fast disk I/O is; the less of it you have to do, the better.
Think of it this way: say you need 445MB of data loaded from disk into memory for whatever purpose. You can either wait for 159MB of data to load from disk and give up one core for less than half a second to decompress it (including I/O overhead), or you can wait three times as long for 445MB of data to load from disk and still give up one core for at least 2/5ths of a second as it waits for 3 times as much blocking I/O to finish. With decompression this fast, it will take less wall clock and CPU time overall to read and decompress 159MB of data than it will to just read 445MB. The CPU is faster than the disk and storage controller by a long shot, no matter how fast they are.
The cool thing is this applies to practically every platform -- game consoles and PCs alike. lz4 is open source, patent free and very portable (it's easy to build and use in tons of languages on lots of operating systems and architectures; there's even a decoder written in assembly for the Z80 CPU used in Texas Instruments' old TI-81 calculators). You don't have to do anything special to have it available on every platform your game is targeting, and it's thread-safe, meaning you can perform multiple decompression operations simultaneously in different threads without locks or mutexes or semaphores or other pain-inducing multithreading trickery.
Using it is a no-brainer and honestly doesn't take much dev time to do it. Yes, the dev time cost is not zero, but the end result is a game with a significantly smaller footprint. There's no real reason not to do this except for simply not giving a shit (or, for the more cynical people out there, wanting to deliberately make the footprint bigger to "squeeze" out competing games on limited storage).