Also, Nintendo owned on the factories that made the carts so you were forced to go through them and accept their rules and they got a cut from that as well. N64 using carts is not only the one major thing that lost them the crown of king of the gaming world but also was the very height of their greed and determination to take advantage of third parties any way they could which is still being felt even today.
The big difference between Sony and Sega/Nintendo is that the former viewed itself as a platform provider on which other companies (even small ones) could find success while Sega/Nintendo considered themselves as the big software company that drive the platform adoption all by themselves and let the other developers to create games for it but always under their "strict"rules.
What really hit Sega and Nintendo (with opposite consequences) was a paradigm shift.
Lunga vita al Presidente.