They got scarred twice in a row with CDs, I can understand why they didn't want to get burned a third time. Besides, time was running out, had they made a new deal for CDs it would have delayed the N64 even further. Releasing a CD update didn't work out well for the Megadrive/Genesis, but the Famicom DD did fine in Japan, so that was a natural choice for an upgrade for Nintendo back then. Too bad that one failed, too. Nintendo really had no luck with formats back then.

I doubt loading times were an issue since that was a problem with the 64DD as well, as evidenced by the Ocarina of Time Iwata Asks.

But even the 64DD was small. It hold something like 64 mb if I'm correct. CD holded 750 mb back than, and it was still small for many games that used more than one.

Because they lost a LOT of money due to pirating, flashcards, emulations, homebrew, blah blah blah so they want to prevent further losses by doing things differently. This works both for and against them, so it really depends on what side you look at this :/

I was following the game industry at that time, I remember Miyamoto would always sh*t on CDs and loading times. IMO he was the driving force behind the decision not to use CD. 

We'll probably never know who actually made the call, but I have a strong feeling Miyamoto was heavily involved in the decision. Not going to say no to the guy who invented Mario, even though you probably should. 

I remember very vividly, this was even in the days before the internet, lol, I'd go to a book store to check out all the game magazines (EGM, Game Pro, GamePlayers, etc.) and I remember it read that Nintendo had decided not to use CD-ROM for the N64, and I remember in the pit of my stomach this feeling of "uh oh, this is probably not good". I remember have to re-read it to make sure. 

And honestly Nintendo was never the same after that. Before that they used to be what Sony is to the industry now, after that, the whole third party thing fell apart. For people who weren't around then or were young kids ... it wasn't always like this with Nintendo, in fact back in those days Nintendo was synonmous with having the most games and the most variety (due to all their developer support). The NES and SNES were to their day what the Playstation 4 is today. 

A "game drought" on a Nintendo console was unheard of in those days. It was a very different time, I feel bad for younger Nintendo fans who didn't grow up in that era and experience what it was like, it's nothing like what it is today. 

I don't think that using the discs for media is a smart move. But I do think that they should have been working furiously on a plug and play media player that plays movies from a USB stick. If anything they should have developed a partnership with the VLC team to bring the VLC media player to Wii U.

...and now the may go back to cartridges again with the NX...
http://www.techtimes.com/articles/79003/20150829/nintendo-nx-to-ditch-blu-ray-for-cartridges-or-sd-cards.htm
http://www.polygon.com/2015/8/22/9190981/nintendo-nx-cartridges-patent

Most of it has to do with piracy. Proprietary formats are harder to pirate. This is the main reason cartridges were chosen over discs and it's the main reason they went with their own disc format. The other smaller reason has to do with control. Nintendo likes to have control over everything. This means not having to pay royalties and being able to make something for themselves. This is also why their hardware in general is so customized. So it isn't just the media storage. It's Nintendo's culture. They like to control every aspect of their business including both the hardware and the software.

Ask the Dreamcast..... Too soon guys?

Because you could effectively upgrade the hardware with cartridges?
I mean, the most effective argument for cartridges, ever, has not been mentioned when once in this thread.
Think about Starfox, about various Mode 7 titles on the Super Nintendo/Famicom.

I mean, I'd think that the Expansion Pak would've been more effective had Nintendo found a way for it to fit within the cartridge itself.