In college I pirated games quite a bit. I never bought one, nor would I have.
The thing is though, if the number gets high enough, let's say 95% of people just copy the game (not unlikely in the age of torrents) and only 5% purchase it - might not be enough to fund a AAA game, whose budgets now run in the 100s of millions of dollars, and, at $70/pop, need about 6-10 million purchases to make up for the flops that will also occur.
The real problem, is that if it's _really_ easy to copy, and the company puts in no attempts to prevent this, then a lot of the people who would have purchased the game, don't bother and just download off the torrents.
Tough balancing act. I don't know what the answer is.
I do think the effect of piracy on a company's bottom line is overstated in just about every case. It's easy for us an the HN community (generally pretty intelligent and technically inclined) to forget that downloading a torrent isn't the simplest thing in the world, particularly the lengths you need to go to in order to get some pirated games to even function properly.
Agreed with you on the hassle of running a pirated game, and, honestly - I'm unwilling to run some random .app/.exe on my system. Hell, I'm not even comfortable opening .pdfs anymore.
You have zips, rars, 7zs, archives split into parts. Some need you to mount a iso file, some you need to mount multiple iso files. You may need to run a sketchy exe to patch the game, or copy files from an iso into the installation folder, run other patches in the correct order, etc. etc.
In fact, from your desktop, it takes less than seven steps total to download and watch a Full HD movie of your choosing from the pirate bay.
This is why steam and GoG wins. Before I look for my old CDs or search on p-bay for that old game which I wouldn't mind killing a few hours on, I check to see if it is ~$5 on steam or GoG. The process is so simple and next time I feel like a trip down memory lane I know it'll still be there in my steam/GoG library waiting for me.
That EA failed to realize that they could monetize an online Simcity regardless of whether or not people pay to play offline demonstrates a serious lapse of judgment.
I don't particularly think they are wrong. For example, after a while, the ridiculous ease of obtaining hacked items ruined single-player for me -- it would be more fun I'm sure to have to work for everything, but I don't have the willpower or incentive to do that unless it's forced on me.
Look at Minecraft. There are multi-hundred player online servers that do great business by providing a persistent world where people have to work for things, making their money by giving diamonds and perks to donors. Not many people play single-player religiously. It's fun for a while, but the main demographic that plays offline is almost certainly the hopeless creatives. (And there's a lot more people who are into competitive/cooperative rat races than are endowed with both a self-motivating sense of design and a bunch of free time.)