Piracy is something of a real issue. It can impact the livelihoods of artists as well as the big companies. However, the methods that companies go to when fighting piracy are extreme and infuriate end users. The people that listen to music or play games for the love of music or video games.
My friends over at KMBOD have written in the past about how horrible some of the Digital Rights Management (DRM) systems are on video games. These systems require continual verification that the game has actually been purchased. In some cases it makes the game unplayable or extremely difficult to play. In some cases the user must be online the entire time regardless of the type of game the user is playing. It makes sense for the game to be online if you're playing multiplayer games, but if you're playing a single version of the game why would you need to be online? Why should the game suddenly crash if you get disconnected from the internet? These types of things anger the gaming community and drive them away from specific titles and potentially entire publishing companies. Some publishing companies are Electronic Arts and Valve.
I don't think that DRM is the right system to use. For one it's easy to get around if you really want to and many players kind of look at DRM as a challenge something they should get around and publish online as a community service. It's not just video games that do this, but also DVDs, Blu Ray and CD's. In fact in the US it's illegal under the DMCA to circumvent DRM.
So what would I do instead? Since there are a fair number of pretty easy distribution channels for video games now. There's Steam, EA's origin and a few other ones that I'm not really aware of. There's also buying it from Amazon, Best Buy, Game Stop and a bunch of other stores. So access to the game is pretty easy. Price might be an issue, but for good games people are willing to pay a premium, just look at the sales of Skyrim and Modern Warfare 3. Huge blockbuster games. These changes are mostly for First Person Shooters, but similar type changes could apply for other types of video games, such as RPGs or strategy games.
Despite the ease of access people still pirate because they want to try before they drop $60 on a game. So what I'd do is make it as easy as possible to access both legally and illegally. I fully believe in the try before you buy model. However, for copies that weren't installed from a CD or downloaded from an online distributor like Steam the game quality would be diminished. For instance many gamers complain about the number of frames per second for a game. Video is shot at 60 fps and the human eye can't see much faster than that, but we can tell the difference if it's much slower than that amount. In the illegal versions I would make the game run at 30 fps, but it would initially start at the 60 fps and over the course of a minute or two and have a little note flash that if you buy the game you can get the full 60 fps.
Another feature that gamers complain about is the perspective within the game (field of view FOV). They describe it as feeling like your playing with your head in the monitor. basically it's restriction on peripheral vision. Again I would start the game out with full vision and then slowly move the POV into the "monitor" restricting the view and giving the paying customers an advantage over the pirate customers.
I would also make the user do less damage than their paying counter parts. This would reduce the number of kills and make the player less effective on the playing field and more likely to die and less likely to kill. Finally, the last thing I would do is to have a little pirate flag next to any player that didn't legally purchase the game so all of the other players would know when some one hadn't bought the game. In games where kill counts matter this could cause users to be banned from servers and reduce the ease access for playing.
None of these things would ruin the game to the point that some one wouldn't want to play it. What it would do though is push people towards paying to be able to compete at the same level as everyone else.