You can put whatever SoC you want in the Apple TV Box. It doesn't matter at this point. Apple TV hardware isn't the problem. It's the streaming box itself that has been stuck in neutral. My friends 3rd Gen Apple TV and my 4th Gen do basically the same things. My 4th Gen (2015) does basically the same thing as the latest and greatest Apple streaming boxes in 2022.
The problem with these streaming boxes is that they are now integrated into Smart TV's. Apple did themselves NO favors by allowing the Apple TV+ App on pretty much every device. That to me would have been the major selling point by keeping the Apple TV+ app tied to Apple hardware. That's why Roku, Fire Sticks and Chromecast's now sell for less than $50 USD. Apple is still charging 4 times the amount as if it's the only game in town. Now Microsoft according to rumors will introduce an XBOX Game Pass stick that will allow you to stream and play AAA games and depending on one's internet connection they could play them in 4K.
Developers will go with the biggest gaming audience and that would be Microsoft, Nintendo and Sony. The mobile touch games have lost their luster and people are back to gaming on their PC's and the latest consoles.
The strategy of putting an AppleTV app into various third party boxes is dependent on Apple having content on their AppleTV+ service worth having.
Paying for third party content got Netflix to where they are now but they Netflix is suffering as content owners withdraw their content back to their own services or hike the price up on big ticket shows or films.
Apple decided not to pay to hire stuff to boost the AppleTV library but instead pay for exclusives - this makes the content that is on AppleTV+ quite sparse in comparison and the overall library quite slow to build. As people axe streaming services to save money surely AppleTV+ is going to be one of the first to get dropped?
Their strategy has to be to get people to stay signed up or get Apple One and have enough reasons to stay on it as a services subscription for music an arcade. And giving cheap TVs the ability to sign up to AppleTV+ without needing an AppleTV box would probably be a good plan if Apple are happy to give it up to 10 years for people to refresh their TVs.
The MS game pass stick sounds very much like a thin client device that Apple could do - perhaps it's the sort of thing that a 'reduced cost AppleTV' could figure into.
You don't need local heavy duty hardware - just enough to stream games from afar. Not sure how people might like that games model.
However, the key thing is here Apple just haven't inked any major headline deals to get people to sit up and look - Microsoft knew enough to get Bungie purchased to make the exclusive title that would bring people to the Xbox - Halo.
But if Apple have had talks with EA and potentially other companies why haven't they closed a deal before or now? Do they even have serious plans to pivot towards games? How does AppleTV hardware figure into this? And is the lack of deal making a strategy thing (they aren't interested or the price isn't right?) or actually a failure to close a deal?
Remember Apple passed on MGM and Amazon are now proudly letting Prime subscribers watch the entire James Bond library as part of their subscription. Amazon also do live sport events (US Open Tennis for example) which don't need development ramp up time.
What gives you the idea that mobile games have 'lost their lustre?' the sheer number of people who play these games bring a small percentage that will pay the microtransactions to make developing the game worth their while. They must be profitable otherwise why would these devs continue to pricing model? You could certainly say that mobile gamers far outnumber AAA gamers.
Back to the topic though, Apple really do need to fully discontinue the AppleTV HD to be able to do away with it. The new cheaper device might help and even an A15 powered 7th generation AppleTV 4k (8k?) above it all would be nice.