I think the attitudes of developers also played a significant role.
When the PS1 came out, it gave them a chance to really try new things, and publishers were willing to take more risks because they didn't have to worry about cart costs. The result was a lot of really fresh and innovative ideas, even if they weren't as polished and refined as the 2D games we were used to.
It's also worth noting that sprites are kind of a bitch to work with, really.
You want to change a character's hat? Go modify every single frame of that character's animation. You want the character to be bigger (and not be a pixelated mess)? Same. How about having them right-handed all the time? Hope you like doing twice as much work.
To me, the PS1/Saturn/N64 was to 3D what the NES/SMS was to 2D. The graphics were glitchy and unpolished, but over the course of their lifecycles, those consoles brought us some really great new gameplay paradigms that would be perfected in the following generation of consoles.



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