A contractor is supposed to be an outside expert, not a sub-employee.
A sexually-harassed FTE may be concerned that fighting for their rights is going to black-ball them in their career, but they rarely need be concerned that it'll cost all their colleagues their jobs, because a company is rarely incentivized to cut a whole department if one employee sues but can decide working with a contracted company isn't worth it, and go with one of their competitors to fulfill the contract, if one of the contracted employees makes waves.
Now imagine being a naive post-teenager being offered to work in "the greatest video game company of all time" but under the sole little condition that you are hired as a contractor.
It works with any big name that you would be personally proud to work for.
And what is even more saddening is that the more the brand is loved (Nintendo is part of the childhood of basically any today engineer), the more they can abuse those tactics. For a lot of people, working for $BIG_COOL_BRAND is already felt as such a gift that they would sign anything without negotiating.
Like everything in life, the older you get, the less you fall in those traps, but that’s not a problem : there is a continuous influx of new people ready to fall for the same tricks.
Absolutely nothing you’ve said has anything at all to do with contracting.
Adult. The word you’re looking for is adult.
That's obviously not the case with the contractors described in the story, who are blatantly just direct employees in all regards except with less benefits.
