Like it or not guys, snk had a cult following at best. A handful of fanatics that are willing to buy the exact same game (same sprites, gameplay engine and all) every single year aren't enough to keep a company going. This is why snk failed, they never made any truely new games after 1996.
And they are all exactly the same gameplay wise.... only sad sad people who play the games way too much are going to notice the subtle combo and reversal changes over the years. With a few notable exceptions, every character has the same sprites and the same special moves. So to the average gamer (the people you have ot attract to make money) it was the same game.
And perhaps you read my response wrong, but the hng64 was a good idea.... they just didn't have enough money to produce good games for it and it flopped before it even got started. The reason they didn't have enough money was the poor sales of their neogeo titles due to the fact that they basically released kof over and over again every year and only the most hardcore snk freak bothered wasting money after the first few. This also applies to arcade operators.
It was a good idea to try new engines, because, lets face it, snk isn't the best at coming up with original charcters and concepts for new games. Their two biggest series are kof, a blatent street fighter ripoff and metal slug, a cartooned version of contra. Mind you they put their own spin on the games, but after the initial releases, the ideas stopped coming. I honestly think that the only reason snk stayed in business as long as it did was the brilliant design of metal slug, a design that was so brilliant that they managed to release the same game (with new levels of course) 5 times and people happily bought it anyway.
Take away those two series and you have a handful of failed sf2 clones, a few puzzle games available on other systems and One or two oddball fighters that were actually good, but for some reason they ignored (Sam Sho and the later fatal fury games). Putting 30 characters in a fighter game isn't a good idea unless the hardware can support it and sadly, neogeo mvs didn't have the juice. If nothing else the hng64 could have offered greater capacity for future 2d titles, but knowing snk they'd just recycle the 10 year old sprites again rather than take advantage of the hardware.
So come to think of it, none of this is relevant as the true reason snk failed is because they were just a lousy game company.