Nintendo would have dominated the generation if they went with disks instead of cartridges. The major issue with cartridges were that they were very small in space, a CD could hold many times more data which could be used for FMV, music, backgrounds, etc... As a result of not having that space, most games simply were not possible on N64.
The irony about the whole rendered graphic situation that gave CDs the advantage, is that it was Nintendo who demonstrated that games with rendered graphics could win a generation. Nintendo first started using them with Rare on DKC. Immediately after Square began experimenting using them, although only Super Mario RPG got translated to English - this is the direction they went with Final Fantasy VII, and it is also why they couldn't release it on the N64.
If Final Fantasy 7 had come out for N64, so too would have all of Square's games, and it is highly probable that Enix and Capcom would have remained onboard with Nintendo.
I describe myself as a little dose of toxic masculinity.
