If you sell games for roughly the same amount as before (or even a bit cheaper), you have extra surplus you can use to subsidise the cost of the console a bit.
Effectively, you'd be cutting a corner on worse load times, I guess?
Keep in mind that the above ignores questions of piracy. I don't know what the actual impact of a CD based solution would have been, but I can tell for sure that the officials at Nintendo thought it would have made a difference when they made their decision.
> Nintendo had a hard enough time with preventing piracy and unlicensed games with the NES and SNES [...]
Yes, so I'm not sure that the cartridge drawbacks bought them that much in terms of piracy protection?
I agree that the PS1 had more piracy, but I'm not sure that actually diminished its success?
At least in my corner of the world (Spain), piracy improved its success. Everybody wanted the PSX due to how cheap it was, I think it outsold the N64 10:1.