Cut the cdrom addon price in half and start development immediately on a super duo with the arcade card built in? Also, concentrate on more dos ports and advertise it as a cheap alternative to pc gaming. Maybe by porting Civilization over to the cdrom format? Hmmm....
I have to imagine that your first point was the only hope for the system. Given that the CD-rom attachment came out only 1 year after the system had been released, and was ridiculously expensive, i.e. $399 is $700 in today's money, it would severely turn off consumers. They did drop the attachment to $150 when the duo was released, but still, that was expensive given that people had just spent $100-150 for a TG-16. Also, the Duo was an upgrade, and had a $300 price point.
Upgrades to systems seem to be the death of a company, in reality. Sega made the mistake of releasing the CD, 32X, and Saturn in a very, very short time, leaving consumers with a lack of trust in the company to continue supporting their console. I'd blame that for the death of Sega. Even though they survived long enough to release the Dreamcast, they were bleeding money from the release of the Saturn until they exited the console market.
Perhaps there was no prayer for NEC/Hudson Soft, regardless of what they did. It took Microsoft 4 years in the red to turn the original Xbox profitable - a venture that would fold most companies. It took Microsoft basically surviving an entire console generation on their massive supply of cash, to become a true competitor in the market.
People are talking about the Ouya game console being the next big thing - however, I highly doubt it will even scratch the market. You have to be willing to lose a TON of money to become a competitor in the video game market.
