Did N. Korea call our bluff or is this their way out?

OK.  This is interesting.  The N. Koreans didn't conduct a nuke test but they did launch a missile that failed.  Is this their off ramp or can it be said they called our bluff?

Smart individuals on both sides would allow the N. Koreans to slink away with pride intact but I don't know what McMasters is thinking. Is this a dead man's hand or are we gonna give an enemy a chance to back down?