I've always wondered how Sony measures these things. What do they use to show that it actually stops piracy (I'm sure it can slow it down a bit) for a lot of people, and that those people then turn into customers? How do they control for things like "popular game" vs. "unpopular game", how do they control for pirates who try the game then buy?

How many people go through the time and effort to mod their console just to 'try before they buy?' There may be a handful, but this isn't PC gaming we're talking about here.

It's not hard at all to circumvent this, I doubt that it "eliminates huge swaths of pirates". Does Microsoft's Windows activation scheme stop people from pirating Windows? I don't think it had any significant effect, people just download images that have activation already patched out.

In Microsoft's case, their main concern is OEM piracy, and the activation system diminishes the quality of the pirated product sold to the unwitting consumer.

And anecdotally, the activation has pretty much stopped casual sneakerware piracy. People don't loan out their Windows CDs like they used to.

Microsoft Activation puts enough down to try and convert more sales without getting in the way to much of legit customers. I think it's a good compromise, only other thing I would do maybe is try and identify pirates and try and get them to pay say $50 or something, they aren't going to pay the full windows price but I think a lot would pay a lower amount that aren't paying at all at the moment.