Actually, I don't believe piracy is to blame for the sad state of computer gaming. Its because of compatibility.
Why is console gaming such a cash crop when the piracy levels are through the roof on them as well? More than half the people I know have modded xboxes, PSP's, DS's and PS3's. When you put a game in, it friggin works or it doesn't and you bring it back to the store.
With PC games there are tons of compatibility issues that can crop up when you don't have the specs that the game was designed on. Meaning, even having a decent video card these days isn't good enough since yours may have issues with specific games until they fix them in later driver releases. Not to mention possible chipset/cpu issues (look at the issues dual cores have with P1999 as an example).
The average non-technical computer gamer will try a game and when it becomes an issue to get it to run right or it doesn't look as good as on the box, they will give up on the game and return it if they can. Do you think they are going to try again anytime soon? They would rather get that PS3 game, because they don't want to be bothered. You don't have to install the game, no waiting, etc.
The issue with PC gaming is that there are too many different variations of hardware and the laziness of game developers to create their game to work correctly on as many as possible, instead of shooting for just the latest and greatest pieces of hardware/software.
This, in part comes from the gaming industry being governed by a select few that are massive and have strict deadlines. Remember when Vanguard came out? The release was horrendous because SOE pushed it out the door when it clearly wasn't ready. It could have been a great game with a huge population if they simply waited another 6 months. Its pretty much forgotten now.
Before PC's got really cheap, only people interested in them would buy them. They didn't mind futzing around with settings, drivers, etc for an hour to get something to work. For about a decade computers have been cheap enough that the average person could afford them. Unfortunately, they are the breed of people that want it to work the first time. Thus, the compatibility issue.
Sorry for the rant.
In short, too many people don't know enough about computers and have been burned before with a PC game. And Console games make it easy to actually 'play'. It either works or it doesn't. There's no need to worry about trying to make it work.
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