Naughty Dog likely wouldn't exist in the same way today. They were actually a pretty mediocre/no-name developer back in the day, I remember "Way of the Warrior" was a really cheesy Mortal Kombat knock off.

Sony probaly would've been content just to be Nintendo's hardware supplier and Nintendo probably would've let them make set-top-box versions of their consoles.

The main reason Naughty Dog was contracted was to make Crash Bandicoot, because when making their own console Sony naturally needed a "mascot" to position against Mario and Sonic, that would be unncessary if they were working with Nintendo.

The Super NES CD-ROM honestly probably wouldn't even have been all that successful, but it would've prevented Nintendo/Sony from falling out and the next natural step would've been for Sony to assist Nintendo in the proper SNES successor.

I would REALLY like to see Legend of Dragoon with Wii controls. Now that's out of my system...

I expect that the instant Nintendo becomes a software dev instead of hardware and software, the two big hardware giants will immediately raise the price of their consoles. Nintendo for the past couple of generations has not competed on the power front, but that's practically all there is between Microsoft and Sony: a power war. Remove Nintendo making the Wii U for $350 and the only competition left is between Microsoft, Sony, and PC's. All three of those are ruled by a spec war, not a price war.

Without Nintendo, I imagine what we'll see is very powerful consoles going for at least $200 more than they do now.

Gaming wouldn't be as big as it is.

FIXED!!

Sega would rule gaming.

There wouldn't be any. Nintendo and Sony would be a couple from the start.

gaming would be totally different by now.
I don't know if it would be different positive or negative

How so?

On what terms? Who would have backed down from the royalties dispute? Nintendo or Sony? If Nintendo backed down, it would be a 3rd party company today. If Sony had backed down, then we'd probably be seeing a lot similar trends to the SNES vs Genesis...(Yes, Sega would still be a console manufacturer)

Maybe, would have been an interesting generation