Why would Nintendo choose a cartridge format for their Nintendo 64 system while other consoles were using the high storage capability of CD?  To better understand we must first go back to the days of the Nintendo NES.

One of the causes of the Great Videogame Crash Of 1983 was the markets over saturation of crap software titles. Nintendo entered the market in 1985 and revitalized the industry. One of their methods of preventing another crash to the market was sheer 'CONTROL'. Nintendo was the tyrant of the video game industry in the 1980's. They controlled what games were released and when. Their method of control? Cartridges.

Each cartridge game released by Nintendo contained a security lock out chip. This chip was created to prevent developers from making games without Nintendo's knowledge. Also Nintendo was the sole manufacturer of each cartridge. This meant that a developer's game would first need to be approved by Nintendo. If the game was approved, the developer would be forced to pay for each cartridge needed for the amount of games they intend on selling. Obviously the more ROM chips the game required, the higher the cost for the cartridge. This additional cost was reflected in the games final sale price, and the main reason why CD games are cheaper. Nintendo also reserved the right to restrict the amount of cartridges the developer planned on selling. This was truly a great business model for Nintendo and it prevented over saturation of the market. We as gamers saw it as Nintendo's "Seal of Quality".

However these same tactics were used against other console manufacturers. Nintendo used bully tactics to keep developers in line. They could only publish limited amounts of games. Some managed to counter Nintendo's tactics by publishing software under a different label (an example of this is Metal Gear game developer Konami who published games under the company name "Ultra"). Another bully tactic was console restriction. If the developer created software for Nintendo then they could not develop software for other consoles. It took several court decisions, and the success of the Sega consoles (and later Sony) to finally put this type of restrictions to rest (Nintendo began losing great developers).

In 1992 Nintendo had plans on releasing a CD based add-on with the help of Sony and Philips. They began to realize that they would lose money by having to pay royalties to Sony and Philips for CD based technology. It would also give Sony the right to publish software without Nintendo's approval. The deal was immediately halted, and Sony went on to develop the Playstation.

Now with Sony in the video game market, Nintendo would not create a CD based system. They would wind up paying royalties to another company rather then having developers paying them royalties. So the Nintendo 64 arrived as a cartridge-based console. Nintendo stuck with the formula they knew. Eventually, Nintendo abandoned the cartridge with the GameCube console, but adopted a proprietary disk format made by Nintendo based on Matsushita's optical technology. So Nintendo still had control…hahaha