If you look at old pictures, you'll see that most consoles were set up close to the players: on a table between their seats, laying next to them on the floor, etc. This is why the 2600 in particular had such looong power and RF cables, while the controller cables were comparatively short. It made perfect sense at the time: you had to swap out the cartridges at the console, and you had to manipulate the console switches as you played, so why not make them as easy to reach as possible? In that configuration, when you insert the cartridge, the top and front labels are facing the player, as they should. It also makes sense for the controllers to be plugged into the back, because that would be an easy place to reach them. (It was also more practical because the internal 2600 circuitry was all in the back; the front of the console is just empty space).
To piggyback on this, it should be considered that with early systems such as the Atari, the console itself was often integral to gameplay. The design of the Atari in particular was, in many ways, a holdover from the dedicated Pong console era, when any software interaction beyond basic paddle movement was done in hardware. This is also why controller cords were so short then--why would they need to be longer if you were going to be right in front of the system anyway, operating switches and buttons and exchanging cartridges?
This was not exclusive to the Atari by any means, either. The Odyssey 2's alphanumeric keyboard and short joystick cords demanded that players would be positioned in the immediate vicinity of the system. The Studio II is the extreme example, with keypad controls integrated into the console itself.
This design philosophy was a holdover, itself, nearly from the start. The Bally Arcade was way ahead of the curve, with fully software-based menu navigation that could be manipulated with either the console-mounted keyboard or the game controllers themselves; unless you're messing with BASIC, the only real reason to touch the system is to swap a cartridge and press "reset." And Bally 'videocades' are hotswappable so there's no need to even touch the power switch until you're finished playing altogether. Even several early Channel F games had controller-based 'OS' functionality as well. The APF M/P1000 and Intellivision introduced keypad-equipped game controllers which obviated the need for any console-mounted controls beyond power and reset (which are fundamentally hardware functions that boil down to "on/off" and "interrupt"). Yet, they each had comparatively short controller cords and power cables which dictated that players would be right on top of the things.
I actually think the conventional wisdom of how players interacted with each other--that sort of quaint and very '70s idea of players huddled together around the machine--was deeply entrenched and influenced both console design and game design (chicken vs. egg?) well into the '80s.
I think that more than any other system, the Nintendo marks the paradigm shift which removed the game console as an element of software interaction once and for all and literally changed the way we play home video games. In turn, I think this shift was made possible by the shift away from arcade-style games that was going on at the time (which, arguably, was also heralded by the Nintendo), toward bigger, more involving games that take longer to play and reduce the frequency of cartridge changes.
And that's really the key thing that allowed it to happen, IMO. The Intellivision, Atari 5200, and Colecovision came close--they all check the same boxes as the NES from a hardware interaction standpoint ("all you need is power and reset")--but their overwhelmingly arcadey libraries precluded the necessity for comfortably lengthy controller cords from which to enjoy prolonged gameplay sessions...although the proliferation of third-party controller extension cords and RC joysticks were probably the first breaths of changing winds. As if anyone could escape the Atari 5200's gravitational pull anyway.
Edited by BassGuitari, Thu Jun 14, 2018 4:48 PM.