I disagree. Keep it at $99 even bump it to say $129, spice up the specs with 802.11 AC, better graphics etc.
As for the Android app, something tells me that many if not most android users are devoted google store users so iTunes profits wouldn't surge so much cause they would still be buying for their own. Making it all moot.
iPod sales surged when iTunes came to Windows.
I know its not the same, but fact is:
A lot of people get Androids because they are less expensive then iPhone.
A lot of people don't give a crap what OS the phone uses.
A lot of people simply look at the price.
A $59 ATV will be directly price competitive with Roku and Chromecast, but the library of iTunes will make it an instant sell, and that simply means a lot more iTunes purchases.