The AppleTV is probably Apple's most difficult platform from a positioning perspective because it's not clear what they *should* make. As a brand you play to your strengths, and for Apple those are industrial design, brand cachet, ecosystem, and user interface. None of these get better by building a cheaper stick. Price conscious consumers are not Apple's customers. And, because of their (current) developer/app ecosystem, Apple have a price ceiling. They would have a very hard time selling $60-$90 games so they can't price themselves like a games console. Apple is not going to go for market share through a very cheap device (why I presume they're putting AppleTV+ on smart TVs, to still get those viewers) and they're not building a games console, so what they are trying to build is "the best streaming box you can buy." Regardless of price, the middle–to upper class consumer should not be able to get a better streaming box than the AppleTV. That is their goal.
So presuming they are correct, from a business sense, in making a box that's between $150-$300, then the question becomes "what can you have the box do to make that price feel worth it?" I think the current AppleTV was a sensible answer that just didn't take. You couldn't "blame" anyone for the lacklustre success of the AppleTV because the rationale was sound. Give it an App Store and let people build whatever, apps of all kinds, shareware sized games, all the streaming providers, Siri built in, HomeKit integration, great UI....
To fix the AppleTV, they need to either A) keep the price what it is and make incremental improvements until it is undoubtedly the best consumer streaming box (non-nerd, non-pirating and totally grandma friendly) OR B) they need to go upmarket and compete with a games console (too?). But for Apple to get the margins they want, that probably means a very heavy investment in making their own games studio at the very least. And making controllers. And I'm not sure they want to go there. And then they'd still want something for high end customers who don't game. And that would probably look like our current AppleTV.