YouTube channel Video game esoterica actually had a fairly good idea on how should have handled it. Put a little more hardware grunt into the 32x and release the Neptune (Genesis + 32x) while pushing heavy on the software support for this. Use the current user base to hold over enough momentum to slow Sonys progress. Then progress with the then offered to Sega - 3DO M2 hardware which would have launced in 97.

The big thing folks have remember, Sony was not considered a major threat. It was entirely possible it could have just become. another obscure Japanese console from a hifi company. Like the X68000, PcEngine, Pippin & FMtowns Marty.