Alternate history: N64 goes with CDs instead of cartridges

[The_Liquid_Laser]

Something to remember about the importance of FFVII and Nintendo.  Nintendo has made a lot of popular games, but it didn't have any popular first party RPGs at the time.  Even if they lost third party devs making platformers, action adventure, or racing games, that wouldn't have mattered as much because Nintendo already made extremely popular platformers, action adventure and racing games.  What Nintendo has never had on a home console is a really popular RPG (although mainline Pokemon is going to be released on Switch in a few months).  

RPGs were a huge hole in Nintendo's first party and that was also the most popular genre in Japan.  Loosing FFVII meant that Nintendo lost Japan.  They lost both Japanese customers and also Japanese developers.  The lower cost of CDs was also a big factor.  The tides were turning toward Sony and most of the third parties that used to be for Nintendo went over to Playstation.  And everyone who wanted to play RPGs had to get a Playstation.

During the NES and SNES eras you could play every type of game you wanted on a Nintendo console.  When the N64 was released that was no longer the case.  The best RPGs were on the PS1, and on top of that Sony was pretty good about ensuring there were decent games from other genres as well.  PS1 became the console with every type of game on it.  Before that Nintendo was the console with every type of game.  A console that has good entries from every genre is really the best console, and for generation 5 that became the PS1 because that is where the RPGs were.