In the 4th (Wiki 3rd) generation, the Atari 7800 was the only major competitor in the USA to which backward compatibility was easily possible, and they did it, adding several hundred games to the system's library. In Japan, the Sega Master System was also backward compatible with the SG-1000. The NES had nothing to be backward compatible with, so effectively, backward compatibility was a standard in this generation as much as it could have been.

But in the 1990s, backward compatibility suddenly wasn't so important to most. The Sega Genesis had it at its 1989 launch, although it required an additional adapter which was only sold for a few years and was not compatible with systems produced from 1993 on (Model 2 and 3). The SNES eschewed backward compatibility entirely, despite having a console with a massive game library they could have been backward compatible with.

And going into the next generation, the PS1 had nothing to be backward compatible with, but the Nintendo 64 and Sega Saturn both skipped it despite the fact that both had cartridge slots. Similarly, the Dreamcast skipped Saturn backward compatibility as well.

So, what I'm wondering is, how would it have affected the market as a whole and the fates of the SNES, N64, Saturn and Dreamcast if they'd been backward compatible with their immediate predecessors?

Could it have kept the SNES from lagging in 1991-1992 and built up more early success? Would it have helped the Saturn, as the Genesis continued to get large numbers of games in 1995 and 1996 as developers still struggled with Saturn programming?