With the assumption that the vast majority of players don't want to jump through the hoops to deal with keeping updated on "liberated" firmware versions, the piracy threat is contained to a small population, not likely to damage the bottom line.
However, the risk to online play is greater with cheat enabled clients. A single cheat client can cause great havoc within a game instance. Even if the individual device can be banned, another actor can take it's place. Legitimate clients will get frustrated quickly on a prolonged attack. And that is where the real damage is.