I remember having this discussion on forums like Slashdot a few years ago. I argued that although pirating games was easy in the Internet age, if people kept doing it then the only surviving game developers would be those who adapted to models that prevented it. The usual response was mumbled with the eloquence of a five year old, and said something about copyright infringement not being the same as theft and whatever the developers did someone would just crack it so why should anyone pay for games?
Fast forward a few years, and almost all the AAA games are heavily linked with some on-line element and the most successful games tend to be either multiplayer subscription models or rely heavily on in-app purchases and DLC. If you actually wanted to make a good standalone, single-player, one-time-purchase game today, I wonder how hard it would be to make real money on it. It seems like the only winning options along that path are to make a relatively low-budget game like a puzzler and sell it for an order of magnitude less so it's attractive to a long tail of customers and/or to be hit-it-out-of-the-park successful. Of course, for every Minecraft or Angry Birds there are probably thousands more titles that never quite made it.
I have some hope that crowd-funding models will help to end this kind of stand-off, because they tap into a genuine desire many gamers have for good and original titles to play but they also bridge that reality gap and illustrate in concrete terms why money is needed to make them. I've seen several very promising games get funded far beyond their original goals on Kickstarter, including RPG, RTS and even space combat titles. Whether any of them will actually be able to pull off what they promised with slimmed down teams remains to be seen, as I don't think any of the really big ones have actually launched yet, but this is a field where I'm optimistic about an alternative model to the old copyright vs. piracy conflict.