An (albeit very late) reply to Kryo comment, because I agree with where you start but think your conclusion is way off:
This is the very foundation which permits people to make creative works
for a living in the first place; the end result of a world where your
beliefs were true (all intangible creations are free) would be one
where the only games, entertainment, and art are those made by
hobbyists. That means nothing would likely be created that couldn't be
done by small groups at minimal cost. More specifically, it would be
the end of console games, and PC games would be limited to small-scale
projects doable by people in their spare time. Those that do exist
would suffer from volunteer-only support, spontaneous abandonment due
to "real life" concerns of the creators, and simple burnout before many
projects even get finished.If you dislike
the terms, you have the option to do without--claiming that you would
not compensate the creator anyway is no justification. It only proves
that you've never attempted to make a living from creative work, and
think little of those who have.
I totally agree with this premise. In fact, that sounds like an excellent test to judge the state of IP protection in a particular region. Without IP there would be little economic incentive to create new works, so new ideas produced would be limited to a smaller scale. As you scale the level of IP protection up you're allowed to scale your new works larger and larger, because you should be able to recover more money. The more protection you have, the bigger the projects you can undertake.
So with zero IP protection, you can spend only as much free time as you and a few friends can scrape up to make a game you're passionate about. With a small amount of IP protection, you can take a risk with a programmer an artist and maybe a couple of others to produce a game you'd want to buy. And with a massive old heap of IP protection you can spend 40 million dollars and employ a small army to bring your checkbox-filling sure-fire-hit formulaic game to life.
Unfortunately when there's one group spending 40 million dollars on a game, it forces others to try and match that or appear to have poor production values. Great cut scenes and ultra-high def artwork just don't make themselves. You'd also find you have to match the millions spent by the other guys just to get the same level of press coverage as them (money spent on advertising, press junkets, and just general bribery), all to compete for a *LIMITED* consumer budget.
And it is definitely a limited consumer budget. Just ending piracy doesn't mean there's magically more money floating around, despite what the industy wants to imply. Piracy costing $500 billion (according to UK stats), and you want to claim all that money? Well some other industry is going to lose out then. Joe Bloggs is not just sitting on that cash in his bank, he's been spending it on other items like appliances, food, and cars. Those industries are going to hurt if they lose that money.
Coming back to the $40 million game though we face the true purpose of IP, the promotion of the development of the arts and sciences, which in this case is gaming. Command & Conquer 3 cost tens of times the budget of Command & Conquer 1, but has it advanced gaming by the same amount? FIFA 2008 cost tens of times more than FIFA 1998, but again has it really done that much more for gaming? Does anyone actually think "I've just having so much more fun with these games than the ones I played a decade ago. This budget increase was totally worth it!"?
And if anyone thinks that's just nostalgia speaking, we have an opportunity in this console generation to witness low budget games competing directly with higher budget ones. Thanks to the DS we can see how much fun games can be when studios are able to take more creative risks and actually innovate when huge budgets aren't at stake. I always used to be a strong PC gaming supporter, but this year I've only bought TotA (not exactly a high budget game either) and UT3 (more as a sympathy purchase, haven't installed it yet). On the other hand I've bought and finished 11 DS games and it's been a total breath of fresh air. Now I'm not saying everyone has to agree, and they may say the DS stinks and has rubbish graphics, but it's the biggest selling console this generation which does counts for something and it's in no small part thanks to the unique games. The DS hardware though will evolve in the same way as every other console has, and the budgets will increase to the point that truly innovative ideas are simply too risky to attempt.
So to summarise for the TL;DR folks:
1. No IP protection = too small budget = discouragement for developers. Fair enough.
2. Turning up the IP protection allows bigger projects. I say game budgets are too big. Big projects discourage risk, and discourage innovation. This would be fine by itself but big budget games also make it hard for small budget games to exist because big budget games can buy shelf space/advertising/reviewers and simply shout down the smaller games when it comes to getting the word out. The domination of sequals and movie tie-ins further show the risk aversion of the gaming industry.
3. Bigger projects also require bigger backers, forcing gaming companies to merge together to stay competitive. We're already down to just a few main players. At this rate we'll be seeing ElectronicUbiVision in the next few years, followed quickly by Star Powered Games.
4. The DS shows that games can be produced on a low budget, with more innovation, on a 66MHz machine and still sell fantastically in 2008.
5. There's only so much the average American has available to spend on keeping themselves amused each year. When someone develops a $40 million game, that's 20 x $2 million games that may never be. There's a greater chance the gaming envelope will be pushed by one of those twenty games, than one megablockbuster.
6. Great IP protection is what keeps the ElectronicUbiVision's in business. It's those companies which are the biggest threat to Stardock, and what push it off the shelves at the shops. They are the ones that drown out Stardock in the gaming press. The are the ones which place huge ads across gaming media and on national TV, draining the consumer of their limited entertainment budget. When Stardock shouts for greater IP protection it sounds like turkeys voting for Christmas, since it will just empower the big companies to crush them some more.
So really this is just a long way of saying that it's big companies that hurt Stardock more than piracy, and piracy hurts big companies more than it hurts Stardock. Stardock makes good games on a reasonable budget which people with money enjoy and that helps them win against piracy. Big companies make so-so games and then try to trick people into buying them with flashy graphics, big ads, and throwing money around. Piracy deals far more harshly with that kind.