Piracy has always been part of humanity and it has not killed the SNES, the PlayStation, the PlayStation2, The 360 or the Wii on the console side. All these giant successes were widely pirated. (Ironically, the PS3, which was largely uncracked thanks to mandatory firmware updates, did poorly...)
The Super Nintendo has fake carts manufactured in Asia and sold across the world in underground markets. It had floppy disk based addons that allowed you to store games on 3.5" disks , load them into memory, then play the games on the super nintendo itself (blew my mind when I saw it).
The PSX was piratable by swapping disks and keeping the lid-detector fooled with a matchstick or something.
The PS2 was piratable by soldering a modchip on its motherboard. a $100 one-time expense.
The 360 was piratable by flashing the DVD drive (online gaming would earn a ban though, so only offline game were truly piratable)
The Wii was piratable by breathing on it (ok you had to use a usb stick) and online was also wide open.
Finally, the PC (and commodore 64 / amiga 500 / etc before it) was widely piratable from day one.
Yet the videogame industry (and indeed the software industry as a whole) has thrived in the past 40 years.
The focus should be solely on how to de-incentivize piracy and make money (in a an ethical way, aka no loot box gambling and other shady monetization schemes. )
How did the music industry do it? They couldn't use loot boxes, thankfully, so they turned to more consumer-friendly methods like suing fans:
1. Subscription services.
We have digital games. Why is there no $50/month game subscription service? Those $50 can be split between the authors of all the games you play that month (according to some "complicated yet fair" formula.
2. Merchandising.
The videogame industry has taken this lesson to heart, thank god, and are releasing swag, limited edition figurines, posters, and so forth. Nintendo does offer some minor perks to fans with nintendo points. More can be done in this vein to bring creators and consumers closer together. I'm sure you guys can think of a few.
What else can be attempted?
1. Let's take one step back and consider that the goal is not to get pirates to buy games legally. The goal is to get money in the pockets of developers and any other (ethical) method goes.
What about allowing software devs to have tip jars where people who loved their games can give them $10 or $20 to say thanks. If you've ever bought a game for $20 and thought it was worth $100, you could tip an extra $10 and help make sure that studio has money to make their next game better. If the friction is small enough. If it's a one-click-donate button that takes 1 second, then it could generate a decent amount of money.
2. Not sure what the best way to capitalize on pirates guilt, but there might some clever way to do it.
How would you fix/mitigate piracy?