I've seen this error message occur if you don't have more than one PSN account signed into your PS4. When you turn on the second PS4 controller at the main menu of Deformers, it'll ask you to select a PSN account to associate with it. At this point, you want to choose the second logged in account and after you're back to the main menu, press the "Options" button on the controller to complete the player activation in-game.
Additionally, the primary player (player one) needs to have an active PS+ membership and have the PS4 you're playing on set as their primary PS4 in their account, otherwise all additional players in splitscreen will need to have their own PS+ memberships.
Please let me know if following the steps above resolves this issue for you!