I've heard this theory(ok call it a fact if you want, but I don't believe in it) before HPC, I have my own theory.
1)Profits are still several times the piracy loss, although the piracy loss is pretty fucking huge.(this is a fact actually)
2)Warez and the giant losses are so rampant because the prices are inflated in the first place! Prices must go up due to piracy, sure. But it's the raw price that's the problem. Prices must be so high due to
A:Giant production costs of modern ub3r graphical "hollywood quality" games.
B:Huge company has huge overhead.
C:Shitloads of marketing for one friggin game.
D:Corrupted corporate desires for massive profits.
This all raises the cost, causing those who are not meant to pirate, pirate alot.
Also remember that the losses from piracy may be falsified, and even if they're not, they include piracy losses from those who pirate and then sell the pirated copy for cash. This act causes alot more copies to be passed around(because these people can often semi-mass produce) then someone lending a game to a friend or downloading from a warez site.
Warez is not super simple to get, it's a hassle sometimes.
