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Welp AppleTV does play games. Though as expected it's aimed at the casual crowd.

Though where it's at right now might not be mind blowing but they're only using the A8 chip. Future Apple TVs will no doubt have the A9X chip and beyond, so the graphics capability should be getting better as time goes on.

Also I think that pretty much puts a nail in the coffin of the idea of Nintendo running back to the Wii motion gaming concept. AppleTV has those types of experiences now and they'll be free-$5 a pop, casuals are not going to buy a dedicated console with $40-$60 games for that style of gaming even if it was $199.99 and AppleTV has a much more appealling TV interface/extra functionality for a casual consumer. Nintendo can't compete with that.