Lots of reasons:
- at the time, carts were seriously inferior. They were too small, and too expensive.
- the N64 was underpowered. The PSX/PS1 has significantly better polygon throughput - and even though the N64 has "prettier" polygons, with extra work PS1 games were a lot better.
- because of the cart cost, 3rd-parties shied away from the N64. It was too hard to make a profit.
In the end, PSX had more better games. Technically it was easier to make something cool, with the space on a CD a big part of the reason (unlimited content basically).
...
I really, really hope we see a new console without disc based media soon (web is taking over really). Carts are so big now, and there are significantly technical advantages of carts vrs disc media.
Gesta Non Verba
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