Sega Saturn and 3DO never took off. PS1 was selling decently and was actually a viable alternative to Nintendo.
64dd add on came out only in Japan, in 1999, two years after FF VII released. Most games wouldn't have fit even on two N64 cartridges that could fit on just one PS1 disc. Also CD had way better audio output which was important in games like Metal Gear Solid. And after a while as Sony pulled ahead there was no need to consider developing for the N64 anyways. Business one o one.
Sony got in the industry for not holding back technology and developers like what Nintendo was doing.
Sony went deep pockets with PS1. They even bought Tomb Raider to not appear on other consoles back then. And they did it this gen with exclusive content for Destiny, "helped with developing SF5" and hurt VR as a whole when they bought timed exclusivity for BATMAN VR and RE7VR.