Apple Video Game Console? [Updated]

Appleinsider publishes more information relating to Prudential analyst Jesse Tortora's claims that Apple may have a longer term interest in the video game market:

"We think the video game market represents a distinct possibility for Apple, especially considering that it recently announced the availability of video games for its iPod through its iTunes"

Tortura speculates a gaming console device could be "morphed" out of a combination of the existing Mac mini and iTV, as well as the possibility of a handheld gaming device based on the iPod.

Clearly, entering such a competitive market would be difficult, but the analyst speculates that Apple may be feeling some pressure from potential iTunes competitors in the form of movie-download services tied to the latest consoles.

Rumors of Apple's entry into the gaming market are not new, as there have been previous reports of Apple actively recruiting game developers, but in his research note, Tortura reportedly claims that Apple has hired new software and hardware game developers.
Update: iLounge publishes an interview with iPod product marketing director, Stan Ng, who acknowledges there is a team at Apple focused on iPod games, and did the development of two of the current iPod games at Apple. The team is currently working with 3rd party developers to bring more games to the iPod.