Alternate history: N64 goes with CDs instead of cartridges

[DonFerrari]

Hynad said:

OTBWY said:

Not entirely true. In fact, Square was working with Sony before there was any idea of FFVII. Secret of Mana was supposed to come out for the SNES-CD addon, but due to reason known, the game had to be cut significantly to go on a regular SNES cartridge. There are sources that even say that this very experience is one of the if not the main reason why Square went along with Sony, after they broke off and made their own competing console. Square continued with Nintendo's SNES for a while because.. well.. it was the best selling console in Japan by far. 

This was not just a format change that made Square switch, but a more business and cultural one. Both of them got fairly close as companies and Square didn't release any game (other than FF) for the N64. 

I’m sorry?

Hironobu Sakaguchi

Producer and executive vice president, Square Japan; Chairman and chief executive officer, Square USA

Of course, back then I wasn’t the president of Square. There was a management level above me, and I talked with them to make the decision. But PlayStation games being on CDs was the biggest factor. If you wanted to make a 3D action game on a Nintendo 64 cartridge with that limited space, you could do it. But I wanted to create a 3D role-playing game. It was very clear in my head what I wanted to make, but that would have been difficult on Nintendo’s hardware. …The biggest problem was, of course, memory. Based on our calculations there was no way it could all fit on a ROM cartridge. So our main reason for choosing the PlayStation was really just because it was the only console which would allow us to use CD-ROM media.

Shinichiro Kajitani

Vice president, Square USA

At that time, Square was really close to Nintendo — we were basically like a second party for them. So when their new system was in development, we gave them lots of advice, like, “You’re going to need a CD-ROM drive for it,” “You don’t have enough bandwidth to do what we’re trying to do,” and, “With what you have now, we’re not going to be able to make an RPG.” We gave them lots of advice. But [Nintendo president] Yamauchi-san at Nintendo basically refused to listen to any of it. And that’s when Sakaguchi-san and the management team at Square decided, “OK, we’re going to go with Sony now.”

https://gonintendo.com/stories/289651-square-enix-opens-up-about-trying-to-make-final-fantasy-vii-for-n

What you mention about the SNES CD add-on most likely contributed, considering they were having the same struggle making the games they wanted for Nintendo’s hardware, but there is no denying FF VII was the tipping point. 

You can make conjectures based on what happened with Mana and the SNES-CD, but Sakaguchi and co have been candid about the reasons from the very beginning and their story has always remained the same throughout the years

I just want to double on the "main factor", but not the only one. Like they said it would be hard to do it, but seems like there were other lesser reasons to change.

And considering Sony paid money for Tomb Raider to be on its platform it is likely that if they really wanted FF VII they would have paid for it as well. And considering Nintendo arrogance I don't think they would have stepped in with more money. I doubt that for even a second Nintendo though they were in any risk.