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noname2200 said:

The lesson I allude to isn't that superior graphics are an automatic failure. It's in the importance of superior graphics, or the large lack thereof.

It's a complex topic, and really not that simple. You first have to categorize it by market. Casual games don't need superior graphics. However, games in the Red Ocean, the market the SNES was initially catering to, that market needs good HW capabilities, be it graphics, memory, what have you.

In the Red Ocean market strictly: Then it's the fact that the N64 suffered from a parallel problem to the hypothetical problem of superior graphics, and that was a wrong choice of media format. You will blame better graphics when the root cause was other. In other words you'll say that the N64 failed due to wasted cost in superior graphics, when it really failed due to the wrong choice of format mostly, and launching later than a higher-value system to 3rd parties (the playstation). Would they have had the very same problem with inferior graphics. Yes, and it would have been worse in fact.

EDIT: Could the N64 support the blue ocean strategy? Yes, but prohibitive distribution costs would have likely made that strategy mostly appealing only to Nintendo, since 3rd parties could pursue that on the competing console (which they did).