Amazon is readying a game console/set top box of its own, and we’ve learned from multiple sources familiar with the device that the Lab126-produced gadget will have a form factor similar to the Chromecast, or in other words it’ll be a stick or dongle as opposed to something like the Apple TV. In addition, one source claims it should have support for streaming full PC game titles, and as such might be able to compete with consoles including the Xbox and PlayStation, instead of just Android-powered living room game devices.
While there is no solid evidence to support this rumor, it is entirely plausible.
It's long been possible to squeeze most of the functions of a PC into a case the size of a dongle like the Chromecast (shown in the lead photo), and quite a few models have been released over the past few years. Most plug into the HDMI port found on modern TVs and draw their power from that port, and they pack enough processing ability to run Android 4.0 or above.
Existing devices work okay, so if Amazon released a dongle they should be able to offer a more than adequate movie watching experience. But can the same be said for gaming?
I don't know, but it is possible. And Amazon's device wouldn't be the first dongle to support full PC games.
In January of last year Dell introduced a dongle which plugged into a TV's HDMI port and turned the TV into a wireless monitor. That dongle was designed to work with your existing computer to mirror your existing monitor.
Amazon could well have a similar goal in mind for their dongle (it would explain the rumor about support for iOS games) - assuming this rumor is true.