This article explains how to restore your Apple TV to factory settings, which can be very useful in situations where the device is not working properly or won't respond to the remote or fail to start.
Restore from the Apple TV Settings
If you have access to the Apple TV's menu, then the restore procedure can be done in a breeze. Go to Settings > General > Reset and then select Restore.
This procedure restores the device to its default (factory) settings, which also means that all your personal data (username, passwords,...) and custom preferences will be cleared.
Restore with iTunes
If you are unable to access the Apple TV's menu after a failed update or wrong manipulation, then you can always try to restore the latter using iTunes. For this procedure you will require a Micro USB cable (sold separately) to connect your Apple TV to your PC or Mac. This cable is inexpensive and can be purchased from any electronic stores:
The first step is to make sure that you are running the latest version of iTunes (iTunes menu > Check for Updates). Disconnect the Power and HDMI cables from the Apple TV and then connect the latter to your computer using the Micro USB cable.
Go to the Apple TV summary page in iTunes, search for a section named as Apple TV Recovery Mode and then click on the Restore Apple TV... button.
Wait for the procedure to end and then reconnect your Apple TV to your TV.