Nintendo first courted Sony to develop a CD-based console in 1988, after both Sony and Philips had pitched their ideas to Nintendo.Nintendo decided to work with Sony, and development resulted first in the SNES-CD, a CD drive attachment for the SNES, and later the Play Station, a console that took both SNES cartridges and CD-ROMs. The Play Station was shown at the 1991 Consumer Electronics Show.
However, Sony's contract with Nintendo gave them the full rights to every game published for the device, so Nintendo then went with Philips. The deal was announced one day after the Play Station announcement.
Though Philips continued to work with Nintendo, Sony and Nintendo tried to make up with each other, and Nintendo eventually agreed to allow Sony to produce SNES-compatible hardware. Miffed by Nintendo's abandonment, Sony instead took the Play Station and turned it into its own standalone console, one which would eventually beat Nintendo's machine in the 64-bit era.
Nintendo then broke its deal with Philips, leaving itself with no CD drive in development. Philips was allowed to continue development on the device and, as appeasement, allowed Nintendo-branded games to be published on it. This device became the CD-i, an "interactive CD player" more meant for simple educational titles than for full games. Nevertheless, Nintendo games were made for the CD-i, and while generally liked at the time by reviewers, they eventually became highly unpopular, taking the CD-i's reputation down with them.