Don't compare console games to handheld games. If we were to compare the hardcore games on the AppStore to handheld, iOS is there. Apple TV would tackle home consoles, so...
Apple TV will not be able to handle what PS4/Xbox One, or even the Razer Edge can do (
http://www.razerzone.com/gaming-systems/razer-edge-pro). Take a good LONG look at the Razer specs. It's got an SSD built-in which is one reason why it's expensive, even though making it more FUNCTIONAL.
If A-TV needs to compete, it will need to have a storage drive built-in and it will NOT be $99 bucks but at a much higher price point. It will need to have a huge RAM increase to handle the streaming. So don't go on about hardcore games that iOS has because Infinity Blade, while it's a graphical wonder, the game is NOT even deep at all and is nothing but a "rail" based game.
Want to guess why they went the "rail" route? Because letting players roam about the area freely without choosing a path would require a lot of processing and storage, including RAM to pull this off to render the sequences. That was their limit in using iOS.
What ever happened to that Infinity Blade: Dungeons? It got shut down because of EPIC Games closing down the division that developed it.
Oh, while I'm at it, check this:
http://www.guardian.co.uk/technology/appsblog/2013/jun/25/microsoft-xbox-games-ios-android
It means that some PC games will go the iOS route but not all of them. Anything licensed with the X-BOX such as HALO ain't going there. And before you go off saying how other iOS games compare to HALO, they do look good on surface but they're not as deep as the famous game itself. Games like Shadowgun are nice to look at but are short.
So games such as HALO, Gears of War, and so on and on will require a massive hard or flash drive to install. But you need to understand that all the games on iOS are touch-based. Strategy games, card/board games or anything of a casual note work well in that area. But anything to do with fighting games or "hardcore" nature requires a physical controller.
Touch screen controllers are not ideal at all. That's why arcade cabinets have physical controls for this reason to withstand punishment in a competitive setting. That's like trying to make military pilots use touch screens to fly their planes without a flight stick. Who in their right mind would want to do that? Or even more bizarre, have all the cars be controlled with touchscreens and remove the steering wheel.
How would you drive without going analog? This exactly my point. Touchscreens are not the end all, be all solution to gaming and is not a Sony/Microsoft killer.
So if you think the App Store in an Apple TV is going to make them eat up Sony/Microsoft's market, think again. Think a thousand times. Most of the iOS apps are NOT appropriate for Apple TV because they were designed to be TOUCH BASED on a tablet or phone, not a tv screen.
Even Sony's PSN (online store) is pretty good and offers almost the same thing that the iTunes Store has in relation to tv shows, movies, rentals via Netflix, live presentations, etc. Even I'm sure X-Box LIVE has that as well. Even the PSN has independent games that players can buy from (similar to STEAM) and the games you see in the stores can be downloaded (such as Assassins Creed) without making a trip there. And they do take a while, not because of internet bandwidth but due to the sheer size of the game's requirement for storage, one in which Apple's gaming console would have to have.
And price point wise, the games coming from other console, if they were ported, will NOT be under $10 bucks for your consumer-ish 'el cheapo' mentality. The reason Final Fantasy Tactics is expensive to buy on the App Store is due to the licensing and to pay for the people who re-engineered the game. After all, the game belongs to Epix-Square, not Apple. But Final Fantasy Tactics, as an example, does'nt make iOS any more "hardcore" than other consoles because I already have the original CD in my hands which is one of the greatest games of all time. That game has been around since the 1990s, so that makes Apple LATE to the game.
Did you think game developers make games for FREE? These professionals who work for such companies are worth more than that.