Back in 1988, Nintendo inked a deal with Sony to produce a disc-based console tentatively titled the "[[HilariousInHindsight Play Station]]" (two words). Sony and Philips jointly created the CD-ROM format, which boasted greater capabilities and (at the time) better anti-piracy measures than floppies. (Sony also designed the [=SPC700=] sound chip which is found in the UsefulNotes/{{SNES}}.)

A Play Station console was shown at trade shows in 1991, and while it was originally envisioned as a way to play [=CDs=] on the SNES, a deal was struck in 1992 to have Sony's console sport a slot for SNES cartridges (with Nintendo keeping full ownership and most of the profits from said carts).

Everything quickly fell apart when the then-president of Nintendo realized the contract's wording let Sony have full ownership and profits over the console's games. The company terminated the contract and forged a partnership with Philips while Sony rebuilt the project from scratch, dropping the cartridge slot and creating the CD-ROM-only UsefulNotes/{{PlayStation}} (now one word)...[[Main/EnemyMine but not before turning to]] {{Creator/Sega}} [[Main/EnemyMine first]].

After their partnership with Nintendo crumbled, Sony approached Sega of America and proposed a deal for Sega to assist their developer SonyImagesoft on developing games on optical discs. Sega of America, who also thought that disc-based consoles were the future of gaming but were having trouble developing [[Main/SegaCD their own disc-based add-on for the Sega Genesis]] at the time, accepted the deal while also convincing Sony that the two finance DigitalPictures on the basis that Digital Pictures had made the most progress on programming games on discs (both Sony and Sega would eventually each publish three games from Digital Pictures). This led to a close relationship between the two parties, with Sony even assisting Sega on development of the Sega CD for a while and the two drawing up specifications of a disc-based hardware system.

This ultimately culminated in Sony proposing to Sega of America a optical disc-based console jointly marketed by the two companies, with Sega and Sony sharing the losses made by the console-"[[WhatCouldHaveBeen the Sega/Sony hardware system]]". Sega of America loved this idea and pitched it to Sega of Japan for their approval, only for it to get shot down as the head of Sega of Japan [[ItWillNeverCatchOn was unwilling to believe Sony was capable of developing hardware or software for video games]]. This led to the relationship between Sony and Sega breaking down and the two going their separate ways, with Sony continuing the "[=PlayStation=]" project by themselves. Sega did eventually create their own disc-based console in the form of the UsefulNotes/SegaSaturn, but it was plagued by a series of problems that turned it into an unpopular platform for both developers and consumers. Sega's role in this is by far the least-known part of the whole affair.

It should be noted that Nintendo's moves to snub Sony happened behind Sony's back[[note]]http://arstechnica.co.uk/gaming/2015/07/fabled-sony-nintendo-play-station-prototype-discovered/[[/note]], with Sony and Ken Kuratagi not being informed of the termination until the last minute, at the CES, and in public. Sony's then CEO took that move as public ridiculing of the company (especially since Nintendo snubbed Sony, a fellow Japanese conglomerate, for Philips, a "gaijin", which in the eyes of Japanese businessmen, is as blasphemous as it gets) and thus started to find ways to snub Nintendo back, first trying to partner with Sega, and failing that, giving Kuratagi and the other engineers the ultimatum to build their own console. Sega of Japan looking down on them only making Sony's CEO more determined then ever to push out a console.

Nintendo later terminated its contract with Philips, and the latter company created the [=CDi=] which featured [[VideoGame/TheLegendOfZeldaCDiGames three games]] based on the ''Zelda'' franchise and [[HotelMario one]] based on the ''SuperMarioBros'' franchise (another two were planned, one based on ''VideoGame/SuperMarioWorld'' and another called ''Mario Takes America'', but didn't get very far). These games were all reviled (although it's almost always the low-quality animated cinematics of ''Hotel Mario'', ''Link: The Faces of Evil'', and ''Zelda: The Wand of Gamelon'' that draw the ire...or the mockery), and are best left [[CanonDiscontinuity unmentioned]] in discussions about their parent franchises.

During this situation, Squaresoft known these days as SquareEnix was becoming increasingly frustrated with Nintendo's draconian censorship policies, publishing restrictions, and refusal to move away from cartridge media (which, at the time, had far less storage space than [=CD-ROMs=]). Squaresoft then Nintendo's most popular third-party development studio eventually signed a contract with Sony, which eventually published the [=PlayStation's=] KillerApp: ''VideoGame/FinalFantasyVII''.

In other words, '''Nintendo and Sega [[CreateYourOwnVillain indirectly created one of their greatest rivals.]]''' A rival that actually ''killed'' Sega as a console developer, forcing them into making third-party games. Nintendo fared rather better, though they got thoroughly trounced in sales by Sony for a decade before making their big comeback with the {{Wii}}.

Nintendo's next system, the UsefulNotes/{{Nintendo 64}}, was the only cartridge-based system of its era. Nintendo's decision to stick with cartridges when other systems had moved on to a CD-based format '''was''' boneheaded, but this isn't the place to discuss that. Nintendo's systems after the N64 use discs, but the {{GameCube}}'s discs were half-size (80mm) and weren't quite mini-DVD, while the {{Wii}} discs aren't quite DVD either and the WiiU is said to use a proprietary format which isn't Blu-Ray.

As an aside, the company who was ''really'' scared of all this was Creator/{{Atari}}, whose [[UsefulNotes/AtariJaguar Jaguar]] console wasn't doing too well against the SNES and SegaGenesis (despite apparently being the technologically-superior system). Then-CEO Sam Tramiel began idiotically boasting about how the Jaguar was better than both the [=PlayStation=] and Sega Saturn, neither of which had been released at the time, and threatened to take Sony to court if it sold the [=PlayStation=] for less than $500; Sony did ($300)...and Tramiel didn't. Atari's foray into the CD format (a CD add-on for the Jaguar) didn't help matters, as only 15 games were made for it (none of which were very good) and it was '''really''' badly designed[[note]]Let's put it this way- it had a derogatory name of ''The Toilet'' among gamers.[[/note]].

As another aside: an enterprising emulator developer, byuu, took it upon themselves to create a "[[WhatCouldHaveBeen What If]]" situation as to what this CD-ROM add-on could've been capable of. To that end, the [[http://byuu.org/snes/msu1/ MSU-1]] enhancement chip was created with media streaming capabilities and a storage capacity of [=4GBytes=], well above any official game ever released. There's currently one game that uses it: ''[[http://dforce3000.de/?p=news&t=msu1 Super Road Blaster]]'', a homebrew SNES port of the Sega CD game ''Road Blaster'' (size [=512MBytes=]). If nothing else, [[http://www.youtube.com/watch?v=THJvsIezXrQ it's worth watching a true CD-quality game running on an actual SNES]] (albeit with a modern flash cart with a built-in MSU-1).

While a true SNES CD-ROM prototype unit (possibly the last of its type, as both Nintendo and Sony ordered the prototypes, numbering 200, destroyed) has been discovered as of late, no one has yet gotten their hands on it to do a tear-down and full inspection of the prototype, and is unlikely to do so given that the person who found it intends to sell it on eBay for a hefty sum of money.
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