Aren't there already games for the Apple TV? What could a more powerful, gaming-focused box do that the regular Apple TV cannot?
It would have a hard time competing with the Switch. $300, usable both with a TV and handheld, has tons of third party games as well as all of Nintendo's first party stuff. And the Switch is getting a $200 handheld-only version very soon.
The Xbox One has a discless version (hilariously called the Xbox One S All Digital, or "SAD") with an MSRP of $250, and the regular One S is selling for just over $200. And for that you get a lot of power and a ton of popular games. The PS4 is also selling for $250. So really, to compete on price, Apple's console would need to be $250 at most, preferably lower. Not that Apple seems to be in the business of competing on price.
The most important thing is the software available. Mobile games are free or cheap with microtransactions. People who want to play mobile games can already do so on their phone so any Apple gaming box would need something to set it apart from phones. For one, it would need a real gamepad, and games designed around it, since most mobile games are designed for touch input.
PS4 and Switch have plenty of games exclusive to their platform. Xbox doesn't have nearly as many, but they have the best game subscription service and the lowest entry price. So what does it offer that a Switch, Xbox One, or PS4 doesn't? The answer, potentially, is enhanced versions of popular mobile games. Get a bunch of developers to sign on to make new versions of their popular games, controllable with a gamepad, while also getting at least a few AAA games from the major consoles. I don't think it can be one or the other, because if you want to play console games you'll just buy a console for $250, and if you want to play mobile games you already have your phone.
I don't think it would be successful, and I think if Apple were serious about entering the console space they would have done more with the Apple TV. But if they wanted to try, that's how I think they should do so.
The other option is completely the opposite, some sort of game streaming service like Google Stadia (minus the shitty pricing structure) and don't even bother with putting powerful hardware in people's homes.
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