You really only need two competetive companies to bring pricing in check ... Nintendo/Sega was a decent balance. 

Then games would remain mostly for kids.
Also without Sony, we wouldn't have MS making consoles either. Instead Apple would begin making consoles, and then Samsung would join in copying things from Apple's console. And then maybe after Samsung and Apple make all the money, MS would try to catch up with their own console but it wouldn't sell much.

Probably Sega would still be making consoles, Nintendo would have been even stronger in the market and Microsoft probably would still enter the console market. Even though Nintendo was always dominating over Sega during their console wars and Sega´s marketing/console add-ons failures, Sony and its PS2 was Sega´s biggest/last nail in its coffin (hardware wise).

Edit: Forgot to mention Sega´s failures.

I think Sony and Nintendo would have remained in disagreement. The company would be sending mixed messages to the consumer with no commitment to thier product, and it would have left the door open for Sega...sniffles....Sega (i miss you)

Considering the PlayStation basically shaped modern gaming, things would be VEEEEEEEERY different.
Just take a look at the biggest games of each systems: FFVII, MGS and Tomb Raider on one side. Super Mario 64, Banjo-Kazooie and Ocarina of Time on the other. It's like night and day, and it clearly demonstrates how gaming would be without Sony.

Now, if Nintendo still dropped the SNES CD, but Sony's CEO just said "fuck this" and never released a console... well... the N64 would still be using cartridges. The Saturn would still be a mess of a hardware. Third-party games are mostly released on the N64, but they are far limited by the small capacity of carts. Final Fantasy VII would be an EXTREMELY different game for example, and probably would have not caused JRPG's popularity in the West.

Fast forward to the GameCube. It's likely Nintendo would go for optical media because of natural evolution. Jesus, in 2001 you can't stay with cartridges. The Dreamcast would have a strong launch as in this universe, but there would be no PS2 to make DC's sales plummet. Sega would survive.

Now, the Xbox is a little more tricky. Microsoft entered the console race because gaming devs were abandoning PC to develop on consoles. That's largely thanks to the PS1. It's very likely that PC would still be the platform of choice - again, thanks to N64's cartridges. It would be a Nintendo vs. Sega market, and there would be no need for a complete change of philosophy inside Nintendo - therefore, no Wii. And without PS1 and PS2, there wouldn't be a single home console that reached the 100 million mark. The industry would be MUCH smaller. It'd never become mainstream, and would be viewed as "toys" like in the 16-bit era.

1st of all the N64 would not suddenly sell much more if PS1 didn't exist. (There are reasons but I will not go into it.)
2nd All the PC developers who jumped on Playstation would not jump on consoles
3rd Xbox won't exist
4th Nintendo would still have its strict 3rd party restrictions so no massive number of games increase
5th Gamecube would still suck (But we will still have Rare me thinks)
6th Sega would still be in the market :D (I find that a positive thing)

Edit: Gaming would be smaller but recardless of Sony joining or not gaming will not be mainstream not than not ever

Console would still be associate to nerds and geek and fatsos, Sony made gaming cool, thx Sony

If it never happened, the Dreamcast would have been the PS2 of it's time and Sega would still be making consoles.

tbh if it wasnt for nintys betrayal sony would've simply been a disc thingy manufacture (I cba to check what it was) for nintendo, probably continued their partnership across several generations, even maybe with MS. Sorta how nintendo and Phillips are now.

EDIT: Sorry meant panasonic, i rthink, aah im tired i cba

Are you sure? What IF the walkman fanbase moved to the  SoNyntendo CD System? And then Nintendofans = Sonyfans? 

Cannibalism!?

or

World divided by 0!