Nintendo started to lose a lot of support because the stranglehold it had on third party developers prior to the release of N64 and a lot of them wanted to stop developing for Nintendo regardless. I think Nintendo would have did better if they had a disc format, but it wouldn't have helped keep the developers/publishers that went to Sony and supported them almost exclusively.
If you take notice, a lot of developers that developed previously for Nintendo exclusively or almost exclusively but didn't support Sega didn't support Nintendo yet developed games on both the Sega Saturn and the PSX. These developers had no reason to not support Sega during the 8 and 16bit gens other than their contracts that forced them to remain Nintendo exclusive. In order to actually get a lot of arcade exclusives and multiconsole titles on the SMS and Genesis, they had to license the games from the owners and then port the games themselves.
There were also a lot of games released on the PSX and Saturn that really didn't need the amount of storage space the system offered(potentially.) You could argue why weren't those games multiconsole on the N64?
Squaresoft has been mentioned a few times about staying with Nintendo. Nintendo really angered Squaresoft and it wasn't until Iwata was replaced as Nintendo's CEO that Squaresoft started developing for Nintendo again. You'll find an eight year stretch where Squaresoft didn't develop one game for Nintendo. Not even for portables. Squaresoft instead developed multiple games for Bandai's Wonderswan. After Squaresoft and Nintendo put their grievances behind them, you'll find that the support from Wonderswan dropped and since then Nintendo and later Sony have been the only "console" portables that Squaresoft has supported.
I think between the early console release and how well Sony was doing in the first year, how Sony gained complete exclusivity from some developers, and how the late Nintendo ruled with an iron fist, a disc based N64 would have got them only marginally better support.







