They are if they are me.

And? 1 billion others. eg. The iPhone is just a phone. Not a games machine. The iPad is just a 'pad' media device. The Mac is 'just' a creative workstation. Thing is. If you sell enough, they become defacto magnets for Devs, apps and money. And yes, GAMES!
I hear what you're saying. But you could make the same argument to discount the ATV over it's pricey price...and buy a Roku or Amazon option instead.
The more choices for gaming platforms the better. It doesn't end with PS, XBox or PC Towers. The legendary C64 was £199 in the UK back 'when.' I had one. So having a great gaming box for £99-£199 should still be 'a thing.' Close to £199 and you get compared to the PS4. Closer to £150 and you're getting compared to the 'Cube' Amazon for TV. That's for Apple to weigh up and balance their target demographic which is TV streaming. But it doesn't want to be a one trick pony as cheaper options can do TV streaming far cheaper, just as good and some say, with better 'siri' style talk. So more strings to your bow is prudent.
£249 for a PS4. eg. Argos. (I bought the PS3 when it was £200 2nd hand.)
2nd hand. £180. Eg. Ebay.
2nd £220 with a clutch of games eg. Ebay.
Yes. Well established that the ATV's primary focus is TV.
To be 'very good' at casual gaming at a compelling price is a good strong 2ndary reason (not everyone is a hard core gamer or can devote the time to games of 'that' type. But may whilst away some time on 'Cooking Momma.') It can be it's own market as the Nintendo Switch has show vs PS4 or Xbox.
Each platform can bring it's own type of games.
Apple have to watch the price of ATV. When competitors are half the price and counting.
But to be console-lite at £99 with an A12X gives the ATV a couple of strings to it's bow...and can leverage the games that take advantage of iOS, iPhone and iPad's power. The ATV should be in relative lock step with that eco system. It would be madness not to take avantage of that App eco-system for games and other apps. iOS is 1 billion devices pervasive as are TVs. So it's perfect sense to beef up the ATV to able to be strong at TV, games and apps in general.
If I could pay £99 for an ATV with an A12X chip for gaming? I would. Compare that to the price of a new PS4 or the pending PS5. Not everybody is going to want the Epic Games Unreal 5 engine and exhaustive gameplay of the 'Lara Croft' style game demo as impressive as it was.
At £150 circa....Apple have to watch they aren't losing the the tv customers for the Amazon cube or the potential gaming crowd to the Switch/PS4.
They need to balance the price/spec pervasive. TV is prime. Games are an important 2ndary in my view and they can leverage the massive iOS eco system so it is something they should be doing. Apps in general and that means a chip that can handle the pressure.
We're right to note that ATV and PS4 are different audiences. Not everyone can afford a Switch, a PS4 or the pending PS5. So a £100 Cheaper price allows some to TV and Game. Both TV and Gaming in their broadest sense...are very casual markets but lucrative and pervasive. And the 'kind of games' some turn their noses up on iOS are more like the kind of games I like, perhaps less overblown.
When I sit down and play the PS3, I have to put my 'serious gamer' hat on. It's more exhausting.
A12x. The new ATV King? The best at ATV streaming and the best at Casual Gaming should be the twin pillars of it's business plan. Priced? £99-£150 for two models.
Azrael.
PS. I note you can register your 'interest' at Argos for the PS5. So I guess that is happening around Christmas, eh? It won't be £240, I'll vouch.