Yes, OoT would've had FMV's but the graphics would look worse than what they really are. Even if it came out a year after the """Playstation""" came, it would still look bad. But if Nintendo did go CD, they might've sold better, but at that time, CD's didn't seem fitting since yes, there is a bigger space, but its just that the graphics would be bad and the load times would be through the roof.
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