The failed partnership between Nintendo and Sony will go down in history as one of the biggest, most pivotal moments in the history of gaming. The falling out of the deal for Sony to manufacture a CD-based add-on for the Super Nintendo eventually lead to the creation of Nintendo's greatest challenge and an adversary who would knock them off their empire in the mid 90's in the form of the Sony Playstation. Recently, one of the reported 200 prototypes of the original CD-ROM prototype has surfaced on an auction site, and as of this writing, the bidding has eclipsed $205,000 US dollars. Aspects of it would be features the 1995 PlayStation eventually boasted, like the ability to play music CDs and the layout of the PS1's face buttons. That most likely would be a coincidence, but the similarities are very apparent.
Up throughout the late 80's, Nintendo had been known as a juggernaut of the video game industry in the United States after the fall of Atari and the video game crash of 1983. From the ashes rose Sega and Nintendo, who helped redefine home console gaming with the Master System and Nintendo Entertainment System.
Following the success of the NES, Nintendo developed the massively critically acclaimed Super Nintendo Entertainment System, whose more sophisticated hardware and expansive library put Sega's beast, the Mega Drive (Genesis) on its heels. Sega, looking to branch out ventures to keep their 16-bit counterpart competitive, developed hardware add-ons like the 32X and the Mega CD, two moves that lead to the company mortgaging consumer confidence and third party support.
Nintendo's early plans for a CD add-on began with a partnership with Phillips. A part of that deal in the contract came with a series of Nintendo properties appearing on the Philips CD-I console. Hotel Mario, Zelda: The Wand of Gamelon, and Link: The Faces of Evil are infamous for their poor quality cutscenes and awful controls, and a piece of hardware between Nintendo and Phillips never transpired. According to reports, when Nintendo cancelled the plans for the Sony (likely due to a power struggle and creative freedom among programmers and corporate heads), the base concept was retained and the PlayStation was born.
The original SNES "Play Station" would've been a fascinating device to witness and history would've been rewritten significantly. A partnership between tech company Sony with Nintendo's progressive (and sometimes overly cavalier) mindset towards video games would've had an impact on how matters had played out towards the mid to late 90's, when the landscape was aiming towards the future. The eventual Nintendo 64 might not have been a cartridge-based console and theoretically could've been pretty progressive. Nintendo's rival, Sega, had been losing ground with the commercial failure of the Sega Saturn and might've met their end as hardware manufacturers, that could possibly mean Nintendo/Sony's only competition would have been Microsoft. Or would another company who's influence was affected by the rise of home console gaming had altered their business model and saw better success, like a conventional home device provided by Namco or Neo Geo reimagining their home distribution as arcade hardware began to lose footing?