Also, revealing they were doing illegal price fixing with Sega is not surprising.
The redesign was intended to position the NES more as a home video accessory and remove it from the tainted video game category, hence the front-loading (like a VCR) so that it could fit into an entertainment system / TV table. It may seem silly from a modern standpoint but it was all about perception, and it was what was needed to successfully 'reboot' the video game market in North America.
What’s always been missing from it for me is whether it actually mattered.
The NES wasn’t cheap. It didn’t do anything but play video games. Did its looking kinda (but not really) like some other piece of AV equipment (but having no other actual capabilities) contribute meaningfully to its success? Were a lot of its buyers, who weren’t exactly making an impulse purchase, swayed by the appearance?
I kinda doubt it. Meanwhile, the redesign did make it less-reliable than its Japanese counterpart.
Nintendo already had an answer to the problem of people being afraid of the low quality games that gave Atari a bad name, and that was their "Seal of Quality" which ultimately didn't end up meaning much since shovelware has always been an issue with Nintendo (especially when it came to their handhelds). Still, their first party games were good enough that Nintendo could keep selling consoles even when there were few other games worth buying for them.
SCE in Japan fought back and eventually positioned themselves within the company to be able to fire nearly all of the upper management in the US in order to promote their vision of the console.
It turned out no consumer in the US cared enough about the name, the size of the controller, or the color and look of the console to not buy it.
