If you could spend 2-4k on a special playstation or xbox with double/triple/quadruple graphics capability, it would sell. The games will work fine on the cheapest m1 mac mini, not everyone and every game will need max settings on 4k at 144hz to be a great experience.

Well, only the macOS users would be spending a thousand dollars or more for their console-capable Macs, which are general purpose computers with absurd amounts of memory. TV users could spend a lot less for an Apple TV 4K with M1 inside, assuming Apple released it with less of this or that.

The Apple TV (A12 chip) is currently $199. The new iPad Air with the M1 chip costs $599.

They also don't need the display, camera, microphone. And could sell it at a loss and make the margins with TV+ and game sales.

But they would need their own bundled controller/accessories and get serious about AAA gaming.

Apple has never sold a hardware product at a loss. Never.

Don’t gamers spend tons of money on gaming PCs?

Also, might be cheaper a couple years down the line.

PC gamers do. Console gamers don't. And there are a lot more of the latter than the former.