If Nintendo hadn't reneged on the deal with Sony then Sony wouldn't have entered the market and it wouldn't have mattered what format the N64 used. 3rd parties would have had no choice but to adapt to using cartridges for same games, like Resident Evil 2 for the N64.
If Nintendo had gone with CDs or even something similar then Square would have stayed with them and all those sales Sony got from FF7 would have gone to the N64. Games like Resident Evil would have at least been ported to the N64 and may have been Nintendo exclusive. Would the N64 have sold 100 million like the Playstation? Maybe not. But it would have easily outsold the SNES and won the 5th generation by a wide margin.
Either mistake could have been minor on its own. But both together were disastrous.
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