Gonna be totally honest here. Piracy has always taken place in our house ever since the dreamcast. I remember one day when my brother had ordered like 10 games (this was maybe a year after the dreamcast's launch when we allready had bought some games). Being young, it speaks for itself that I was simply enjoying the games and obviously thought it was cool I could experience all these games.
This was when cd-burners were still not so popular, same for downloading large files with the slow internet from back then. I think it took a year or 2 before we started burning our own downloaded games. We weren't the wealthiest family. Chances were small our parents would buy us games, and my brother occasionally had to suffer his wallet to get that one game he was dreaming about. Nonetheless, we still bought the games that were totally worth owning officially like PSO and shenmue 1 and 2.
The whole concept of being able to finally experience so many games for free was just totally exciting for us. Every new platform we would always try to find a way to get ourselves some free games. I remember the gamecube getting modded after a year, The Wii ended up getting modded too, the xbox360 and even the ps3, which is pretty rare to manage. We became quite the pirates looking back at it(argh matey), and honestly being able to mod a console in itself actually felt pretty satisfying. My oldest brother became very good at it and started to look more like a hobby for him. He liked the technical side of the modding so he enjoyed doing it just for the sake of it. He managed to mod the mega drive with a 50/60hz switch and make profit selling it. He managed to do the same with the saturn and make it read burn copies too(which is great when some games are mad expensive).
Getting the consoles was allready a big investment, but getting the games was pretty hard for us. I think AKI T allready pointed it out well. If we never knew about pirating, I don't think that would have made us "buy" more games, instead we would have just simply not have been able to play so many games. This became especially clear since late. We all have jobs now and earn some good money. We all buy our games regularly.
This is just my story however. I know plenty of people that pirate their games still even with loads of cash in their wallet, and I believe that community isn't as small as people think. Of course it requires some wisdom and skill to mod a console, but some people actually end up making it a service and make money out of modding for others. It is even legal for a shop to mod here in the Netherlands. And yes I think games suffer for it. PC being the most vulnerable of all the platforms has suffered alot from it. Getting less exclusive games and ports after months. Piracy is hard to go against because it's something that happens in private environments. It needs to be tackled differently.
I think the best platform that has proven itself against piracy is steam. Steam does a REALLY REALLY excellent job in tackling piracy. It's not just being able to download your game and play it, but next to that it adds an excellent services. Updates every now and then, a great messenger that can be brought up while playing, good prices and just the overall community experience with achievements etcetera. Playing games is fun, but everybody knows that it's even more fun when you can legitimately share your experiences with others.
This is where I see the future honestly. Official product's gotta offer more than the pirated ones to such a great degreem that it becomes worth money.
So yes, I have been guilty