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The console vendors don't make much on the consoles, not since the NES. When the NES appeared and Nintendo started making a couple bucks on every legitimate game sold (licensing fees), the whole licensing model changed. The console manufacturers' goal became to get as many consoles out there as possible because they make the bucks on the games sold, not on the hardware.
Piracy doesn't hurt a console (or computer) platform much while it is a small minority of users doing it - due to prohibitive costs for equipment (the multi game doctor cost like $600, for example), because it requires a fair amount of technical ability to do, or if the bandwidth is too slow to make transferring the ware practical, the pirate numbers will be small enough to not affect the bottom line.
When the technology is cheap and the skill level needed to pirate the games is low (what was called the "xmas modem kid" syndrome in the mid 80's, and is now something like the "lowtech kid with cheap cdrs and a copy of diskjuggler"), you start impacting the game manufacturers' bottom lines. Too many people do that, the game manufacturers move to more lucrative platforms.
As a long time old geezer pirate, I've seen it happen again and again and again.
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