I thought he simply said they would spend the same amount. So they would consume less games and so have less "cultural" experiences if they couldn't pirate some games:

So, like, if they'd pirated Gears 1 and bought Republic 2 [made up names] then next period they might have bought Gears 2, but then would have pirated Republic 3 and ArmsRace 1.

With stronger anti-piracy measures Gears 1 comes out at the same time as Republic 2 but they can only buy one so they get Republic 2. Next period they get Republic 3 because they don't want to risk the new ArmsRace 1.

In both scenarios they bought 2 games - ie spent/bought the same amount. In the second they played 3 more games than in period 1. The makers of Gears benefited from piracy by winning a convert to their franchise (but notably the industry didn't gain in this scenario).