Update: As yet another example of removing DRM not leading to any reduction in piracy, the game Demigod has been pirated so heavily in its initial release period that it has caused the game's servers to effectively go down. Out of the 120,000 connections made to the game's servers, over 100,000 were by confirmed pirates, leaving only around 18,000 legitimate purchasers. The game is released by Stardock, a relatively small company which has a lot of public support due to the mistaken perception that Brad Wardell, CEO of Stardock is anti-DRM (see the bottom of the next page for more details of Stardock's actual position). Demigod is widely considered to be a good game, it's available as a digital download priced at under $40, and has no intrusive DRM - yet not only has this not stopped the game from being rampantly pirated, preventing legitimate purchasers from playing the game, but has also resulted in poor reviews, potentially affecting future sales of the game.
...
The issue has been confused somewhat because a few smaller companies such as CD Projekt and Stardock are carving out a niche selling games which have no DRM. These games appear to have specific markets with lower levels of piracy, so while removing DRM is a practical approach for them, the broader games market is not necessarily subject to the same approach. Furthermore, upon closer examination we can see that the Stardock case is not as clear-cut as people want to imagine. Firstly Stardock uses another method to reduce piracy: constantly releasing updates for their software which must be obtained through their Impulse digital distribution channel. In effect this is a lot like Steam, so of course they don't need the same sort of overt DRM measures that major offline-only games require. However more importantly, Stardock recently released a Consumer Report (PDF) which specifically outlines what it believes are legitimate and illegitimate complaints regarding DRM, and in no way does the document do anything other than endorse precisely what we've been discussing above. Some examples from the document demonstrate this clearly:
There is no solution to the issue of protecting intellectual property (IP) that will satisfy all parties. There are customers who will accept nothing less than publishers acquiescing to a quasi-honor system for purchasing software [i.e. removal of all protection]. That doesn’t work.
At the other end of the spectrum, there are publishers who want customers to have an always-on Internet connection to play a single-player game. They have every right to require this if they want, but it will cost them tremendously in terms of goodwill and sales.
So what are the issues people have with DRM?
[Some examples below of customer complaints against DRM that Stardock considers 'legitimate' and 'illegitimate':]
Legitimate complaint: They don’t want the copy protection to interfere with their enjoyment or use of the software or game.
Illegitimate complaint: DRM is just wrong in principle, you buy something, you own it and should be able to do whatever you want. This is a view held by some but the person who makes the thing has the right to distribute it how they want. If I spend $5 million making a game, someone paying $50 doesn’t “own” it. There has to be some middle ground on serving customers and protecting IP holders. Users who disagree and want to stick with this principle have my respect but we believe a balance needs to be made that is satisfactory to most users and most publishers.
Like it or not, in the face of rampant piracy, some form of effective protection or DRM is an inevitability for many types of PC games, especially offline-only single-player games, and is here to stay. Steam is one solution, but I've warned that it isn't necessarily the cure-all that some people would like to believe, and still has notable drawbacks. The various DRM methods must evolve to the point where they are both more effective at reducing day-zero piracy, and also less intrusive and problematic for legitimate users. Gamers can assist in this process by making sure that only verified and truthful information regarding these systems is discussed. Hysterical misinformation is not the appropriate approach and will only lead to either more intrusive DRM or worse - as we see in the next section as the article draws to a conclusion.