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G2ThaUNiT said:

I feel it’s being forgotten that it wasn’t just Square that abandoned Nintendo. Namco, Konami, and Capcom also notoriously heavily supported the PS1 either completely or overwhelmingly.

In the end, Nintendo’s stubbornness cost them more than just Square.

It was a dumb mistake. Even if they wanted no to little loading times in game, there were better ways of accomplishing that, the N64 was even setup for RAM expansion. Cartridges are nothing but ROM memory, you could have just included a rewritable ROM cartridge to use as a loading buffer, CD loads data onto the cart and you're good to play for the next 30-120 minutes with no loading. 

The Super NES CD-ROM (the Nintendo one, not the Sony one) already had this design.

Or you could have just integrated extra RAM/ROM onto the chipset itself. 

They should have pivoted even by 1996 when CD-ROM prices were crashing. 

A game like Super Mario 64 could have ran with virtually no loading times even with a 4MB ROM or RAM buffer. It just would've loaded for a few seconds to start the game (which could have even been hidden by Mario running up the castle).