In interviews IIRC ex-Sega staff has stated that they thought they had one more console generation before a 3D-first console was viable to the home market. Sure, they could do it right then and there, but it would be kind of janky. Consumers would rather have solid arcade-quality 2D games than glitchy home ports of 3D ones. Then Sony decided that the wow factor was worth kind of janky graphics (affine texture mapping, egregious pop-in, only 16-bit color, aliasing out the wazoo, etc.) and the rest is history.
Nintendo managed largely not-janky graphics with the N64, but it did come out 2-3 years after the Saturn and Playstation.
Nintendo managed largely not-janky graphics with the N64, but it did come out 2-3 years after the Saturn and Playstation.