In 1994 Sony was in partnership with Namco, at the time Namco was an Arcade powerhouse rivaling Sega with spectacular 3D games such as Ridge Racer, Tekken, Soul Edge and Time Crisis. Namco also made its arcade chipsets (System21, System22) based on Playstation hardware. Sony developed many great first party games, thanks to their internal development studios like Polyphony, games like Gran Turismo, Motor Toon GP, Jumping Flash, MediEvil, Arc the Lad, Legend of Dragoon. Several western developers were 2nd party to Sony, so Crash Bandicoot by Naughty Dogs and Spyro by Insomniac would never been released on anything else.
So, even with a N64 CDs, Sony would have had a strong console on the market. In fact, the PSX was somehow a "spiritual successor" to the SNES.
Anyway, a N64 with CDs could have kept Nintendo and Squaresoft together as partners, with Square games available exclusively for the N64! Games such as Final Fantasy 7-8-9, Legend of Mana, Chrono Cross, Parasite Eve, Xenogears, Einhander and Tobal.
In this scenario, there would have been a tough battle between the two company, and probably they could have ended up with similar results in terms of sold units, with Nintendo absolutely ahead in Japan while Sony in Europe.
