Guess I am labeled as a Nintendo fan with my Nintendo avatar of MUSHA a game on SEGA Genesis in 1990 or my name which is a Mega Drive and PS4 game. My signature which is a logo from a Kojima PS2 game.

The other thing is the N64 era really is the strongest 1st party Nintendo era and they kinda squandered it.

You have to understand having Rareware at that time was like having EAD x2 and Nintendo never really had that for any other generation.

So the Nintendo that Sony was actually up against had they retained their developer support would've been much harder to compete against than any other version of Nintendo quite frankly.

It's hard enough to keep pace with things like Mario 64 and Zelda: OoT and Mario Kart 64, but now throw in GoldenEye, which is an industry shaking blockbuster that basically starts the console-side FPS genre (which is huge to this day), and support titles like Diddy Kong Racing, Banjo-Kazooie, Perfect Dark, Jet Force Gemini, Blast Corps, etc.

I think Nintendo knows they should have compromised on the CD-ROM issue specifically with Squaresoft who was basically a Nintendo 2nd party to that point and was just coming off making Super Mario RPG for Nintendo. Sony simply would not have been able to compete with Nintendo AND Rare AND Squaresoft and that would've created a snowball effect where other devs prioritized
the N64 platform more.

You can also see here the N64 running basically a "Playstation speciality" type game in Resident Evil 2 (which Angel Studios performed a miracle on to compress down onto a 64MB cartridge, massive for the time):

Aside from FMV cutscenes obviously being better on Playstation due to the simple factor of storage space, the N64 version looks notably better. That gap would be even larger if the N64 had CD-ROM, the video bits would look the same but for in-game the textures would've had more space to look even better. 

Imagine a Nintendo 64 that has:
- Super Mario 64
- Mario Kart 64
- GoldenEye 007
- The Legend of Zelda: Ocarina of Time
- The Legend of Zelda: Majora’s Mask
- Donkey Kong 64
- Diddy Kong Racing
- Banjo Kazooie
- Banjo Tooie
- Conker’s Bad Fur Day
- Pokémon Stadium
- Pokémon Snap
- Star Fox 64
- Perfect Dark
- Mario Party 1-3
- Paper Mario
- Kirby 64
- F-Zero X
- Super Smash Bros.
- Final Fantasy VII*
- Final Fantasy VIII*
- Final Fantasy IX*
- Dragon Quest VII*
- Metal Gear Solid
- Resident Evil 1
- Resident Evil 2
- Resident Evil 3
- Tomb Raider
- Tomb Raider II
- Tomb Raider III
- Frogger
- Croc
- Castlevania: Symphony of the Night
- Namco Museum Vols. 1-5
- Grand Theft Auto 1
- Grand Theft Auto 2
- Rayman
- Silent Hill

(* - Likely would have been exclusive.)
... Just to name a few.

It’s not an exaggeration when I say this: Going with cartridges instead of CD-Roms was the single biggest mistake Nintendo has ever made in their entire history. It was the straw that broke the camel’s back for 3rd parties as they all left in droves. The same 3rd parties that made the PlayStation a juggernaut.

When people talk about the PlayStation, with the exceptions of Gran Tursimo, Spyro, and Crash, I don’t hear them talk about Sony’s 1st party titles. The big games everyone talks about are 3rd parties - Most, if not all, the ones I just listed.

If Nintendo had gone the other direction, all those 3rd parties would have stayed because a CD-Rom Nintendo 64 would not only have been just as capable as the PlayStation of delivering the games they wanted to make, but with it being 64-bit over its 32-bit counterpart, it would have been MORE capable. - Which means would would have seen more 3rd party N64 exclusives than PS1. And with SquareSoft and Enix both essentially being 2nd party devs to Nintendo up to that point, Final Fantasy and Dragon Quest would have stayed put - That’s Japan right there.

More sales + More powerful hardware = N64 takes higher priority.

If Nintendo had gone the other direction, the 5th generation, and the video game industry as we know it today, would have been very, very different.

@Soundwave: Actually, it was impossible for the textures to look the same on N64 that they did on PS, because the texture cache was just too small.

Rare wasn't that meaningful on N64. Sure DK64, KI Gold (that was disappointing by the time of it's release) and Goldeneye had it's audience.

One thing I've learned over the years: The American historical point of view isn't always the same as the world's point of view. People who actually experienced a thing have a very different memory of "How things went down" compared to those who learned about it after the fact. And we all have our own personal opinions and biases.

With that said, I'll tell mine.

I was 18 when the PS1 launched and, at that time, I was a die-hard Nintendo fan. Still, I read every bit of gaming info I could get my hands on and watched every show from GamePro TV to Electric Playground to Nick Arcade. The Sega brand was pretty much already defeated along with NEC and Atari. Other major names tried and failed to enter the market and, from my POV, Sony was just another one of those. My cousin and I actually rented a PS1 a couple of times, playing NFL Gameday and Rayman (I hated sports games, btw) and I wasn't impressed. Nintendo's "Ultra 64" content that they showed in arcades looked leagues better.

Nintendo had fully convinced us that the N64 was worth the wait. And when it launched, that was totally true. Games like Mario 64 and Wave Race were beyond anything we could have imagined...but by January 1997, things had changed.

N64 had software droughts like you wouldn't believe. A friend of mine let me play Tekken 2 and Street Fighter Alpha and suddenly, I A NEEDED a PS1. By the end of that year, I didn't even own an N64.

So what caused that? Software droughts? Lack of cgi videos and games that had almost no voice acting and terrible limited soundtracks ( Shadow of the Empire only had like 15 second music loops)?

That's what caused it for me, at least.

And what caused all of those issues? A lot of factors but, as I said a couple of times, Capcom, Konami, Namco, etc. ALL still made games for the N64. They just didn't make the "big games" because those games didn't fit on a cartridge. As the Xbox 360 showed, NOBODY is loyal.

A CD storage media would have made a HUGE difference.

I only became a Nintendo fan (videogame fan in general) because of they used cartridges on N64.
I was prone to playstation at these times. But I couldnt afford any console(I was a kid).
When I got a PC, I tryed to emulate the PS1. But having to download the CD sized games made it impossible for me (horrible internet at 2000s in Brazil). But I managed to download the N64 games.
These games made me passinate about gaming. Made me latter pay thousands for gaming consoles and games in next generations.
If N64 used CDs, I would probably giving up trying to download them and would not play, and might never become a gamer in the future.