Yeah I'm sorry mate but this is ASB.
Nintendo is too entrenched to be bought out by Sega, of all people, with any one or two PODs. Not to mention it is far far harder to mount a hostile takeover bid in Japan than it is in the US (I dismiss any idea of Nintendo actually merging with somebody, given their management team).
You yourself basically had to come up with a string of PODs with no backing behind any of them to give Sega a chance.
There are plenty of ways to get different and interesting video game history (Sega doesn't release the 32X/Sega CD and hence the Saturn does better; Nintendo stays partnered with Sony; Nintendo releases a CD based N64; 3DO holds back a year and releases a console competitive in price/performance with the rest of the 32-bit generation; etc…) but Sega buying/merging/whatever with Nintendo is pretty darn unlikely.
If you're interested in in different video game history I have a post
over here as part of my
Newton timeline, and we also discussed
Sony sticking with Nintendo in this thread.
(And as a blatant advertisement for
my new timeline it too will see a different video game market.)
I was just trying to do a Sega Wank, Nintendo anti wank. Can you think of a way this could happen without ASB?
It's essentially impossible to do an anti-wank for Nintendo. Regardless of the performance of their consoles, they also retain the best video game development team in the world—and have maintained this reputation for over two decades.
Even if the SNES was a failure (I suppose the PC Engine wins Japan, and the Genesis wins NA/Europe) Nintendo could instantly become the biggest, most powerful, and best third party game developer in the world for the next generation of consoles.
Sega, on the other hand, could easily have done much better.
A short version:
POD: PC Engine CD add-on fails.
With the failure of the PC Engine CD (TurboGrafx-CD in North America) Sega reconsidered their plans to launch their own add-on and devoted all their resources to the next generation of consoles. This will keep Sega's relations with third parties (and customers) a lot better.
SGI[1] offers Sega a reference platform for a new super-powerful 64-but console that would be far superior to the rumours of Nintendo's next, and the threatening emergence of Sony.
Sega takes them up on it once SGI fixes a few things.
The Sega Saturn is running a little behind the Sony Playstation in release date so the Sega presentation at E3, 1995 is simply Sonic 3D and the announcement of their analogue controller for the Sega Saturn[2].
The Sony Playstation launches at the end of 1995 and is basically competing with the last 16-bit consoles (Genesis, SNES) as well as early 32-bit consoles (Atari Jaguar, 3DO). With Sega & Nintendo looming in the background (and with Sega still having good relations with third parties) the Playstation is stuck in neutral, although Sony's attitudes towards developers mean a number of interesting games are coming out for it.
1996 is the duel of the giants. Sega Saturn & Sonic 3D against the Nintendo 64 & Mario 64. The Saturn launches in the spring of 1996[3] and quickly passes the Playstation in North America (the Saturn, like the Genesis before it, struggles in Japan).
The N64's momentum briefly eclipses the Saturn in the winter of 1996 and spring of 1997, but the lack of games[4] sees the Saturn return to the lead. The Playstation remains on top in Japan, and there is a three way race in Europe that Nintendo is slowly losing.
Etc…
It plays out as a three-way race, that sees the Sega Dreamcast become the Playstation 2 next generation.
That's about the best reasonably realistic Sega timeline I can think of.
[1] As happened OTL, but Sega turned them down and so they went to Nintendo.
[2] IOTL the guy making NiGHTS refused to let the Sonic team use his game engine. ITTL more sensible Sega management will mean Sonic gets his 3D game to compete with Mario. Think of it as Sonic Adventure (Dreamcast) using the NiGHTS engine, crossed with Sonic CD (which of course doesn't exist ITTL). Not as good as Mario, certainly, but enough to keep Sonic relevant.
[3] This late launch date means it will have the third party games the Saturn's summer 1995 launch lacked IOTL.