Well, people still use tape-based backup today, it's just that there's better technology available to do backups on. Like Ultrium, and such. The only problem is that they're all very susceptible to heat damage. You can leave them in the sun in a hot day and have the edges melt against each other. CD's and DVD's were definetly around at the time, it's that they probably did what any other company did and backed up all data that they could onto a massive 10+ GB tape (mind you, that'd be massive back in the day) Hell, when FS1 came out, I still used my QIC-80 a bunch. I had four tapes, but I soon upgraded to a machine that had such an enormous hard drive, I couldn't use the QIC-80 anymore. The QIC-80 does 400mb uncompressed, 800 compressed. I had an 8 GB hard drive, which is still in service today in the dos machine I use.
And Ive heard horror stories about modern DVD's lasting no more than 5 years, even if they're burned once, read a few times, put in a dark drawer or box, and later fired up again to find that they won't read worth a darn. That, and some discs in extreme humidity conditions might actually split, if they're dual layer. I've had one commercial DVD do that to me, and it's hella easy to do it to a DVD-DL. Just be a dumbass like me and drop it on it's edge. It was like cracking an egg, split right in two!