They need something where Amazon makes money on it, but also encourages the most popular use case...as a DR site for customer's on-prem VMs. At the moment, reserving that DR capacity is the same cost as using it. I would think Amazon's scale would allow for a better deal.
I don't have exact quotes in hand, but the pricing we got was roughly competitive with Azure Site Recovery and Nutanixs' DR solution, which were our other two main options. In the end, we chose none of the above, and just built our own at triple the price with half the capabilities. C'est la vie.
I did recently just get my NSX VCIX, and handled several large scale implementations of NSX, so I might be a little too biased to tell if its really taking off, or if it's just a big deal in my little part of the pond.
Either way, it's a neat piece of technology, and I enjoy playing with it :)
I don't have the background to comment on the reverse-merger, but the VMware-AWS partnership is generally regarded as a smart move, giving Amazon access to enterprise customers who weren't moving to the cloud, and giving VMware a way to get in on that sweet Cloud OpEx budget.
VMware has been doing a pretty good job of being the SDN one stop shop for companies that want that, and selling SDN components a la carte where required.