I feel that the problem is the price, none of the major console manufacturers have tried (or at least succeeded) in building a console for that sort of money. There's probably a reason for that.
The reason the major players haven't made a cheap console is because they (Nintendo excepted) are pushing the boundaries of what "cheap enough" hardware can do. That's necessary for the type of games they want to sell -- but it's not necessary for all games.
I fully expect an Ouya/Google/Apple/GameBerryPi/etc to really find a fun loving, large market at a $100 price tag.
I think Nintendo and Apple have both seen the future of this particular market: casual gamers don't want consoles; they want handhelds that can mirror-play onto their TV when they want a more enriching experience (which isn't necessarily all the time.)
Apple has the iPad+Apple TV set-up; Nintendo has the WiiU as a transitional console generation while increasingly moving all its flagship titles to the 3DS. I fully expect that the next console Nintendo ships will be a lot like the Apple TV--a bridge appliance to point your DS4 at.
Problem is that you are trying to hit a middle ground between people who are gaming enthusiasts and want to play games on a dedicated device be it a console or PC with a fancy GPU. And a larger casual market; many of whom are probably looking to buy games for a system they already own like a laptop or tablet.
I'm not sure if it's more accurately described as a middle ground or as a niche: Casual gamers who want to play cheap games on their TV, with a controller, and/or with friends. (Another possible interpretation of "midcore.")
I think Towerfall's popularity is due in some measure to hitting that specific formula: cheap & fun same screen multiplayer; "mobile philosophy" on a television.
I do think overall you're right that the casual market wants to play on devices they already own. It would not surprise me if Apple released a WiFi controller & added a dedicated Games store on the AppleTV (using touch screens while looking at a TV just feels awkward).
The problem with having a niche market of people who buy your system because it is cheap is that it's not a particularly profitable thing for developers to target compared to a more serious console where you can charge $50 for a game or a smartphone/tablet where you make your money by selling many copies. So all of the best games end up being ported to other platforms anyway, which reduces the incentive to buy an Ouya unless you have the might to lock developers into exclusive deals.
Yeah, this market, back then was the handheld market. If I remember correctly the Gameboy Advance SP was around that price. Really, as processors go up and decent tablets become cheap, a mini 7 inch with a DualShock will suffice.
