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@sulla
you realize most of your points is related to the use of cartridges?
- Nintendo execs arrogantly burning bridges with Japanese third parties.
(force the use of cartrigdes)
- Notoriously difficult to develop games for.
(lack of space) what contribute to that?? you guess it! the use of cartridge
- More expensive to develop games for.
Why? yep you guess it right, cd cost $1 or less to produce and cartridges? dont even what to mention the price of it
- Games not on CDs. (This was the least important factor.)
and again related to you know what :) cartridge again

btw FMW was the new trend and this will answer your nortoriously difficult to develop games for because everyone want FMW in their games at that time and cartridges dont provide enough space for it