In the end though it wasn't piracy that provoked the first game market crash in 78. The gaming industry may have been booming, though it has been in a downwards spiral for the past 3 years, but back in 78 piracy of games was pretty impossible for the average user. Therefore, to add a bit of context into this piracy discussion, I will remind you all of what really made the 78 crash possible.
The market conditions of 78 are frighteningly a bit like our own now. Gaming was a booming, spectacular business that could get anyone rich pretty fast. However publishers back then thought they could get rich and richer forever no matter what they did, so what they did was jack up the prices, cut development costs like hell (ET for the Atari is a sad reminder of that) and above all they had a brutal amount of games coming out at the same time, most of them of iffy quality. The combination of surplus supply, terrible game quality and high prices meant that in 81 people realistically considered the gaming industry was dead, and it came very, very close to death.
This is important as a context because piracy didn't have an impact in the downfall of the industry in 78, since piracy back then was far more expensive to execute than getting the games legally. The publishers were brought down by their own errors, errors that are repeating almost identically today.
What is fun is that when piracy became less expensive and more widespread, that's when the gaming industry started to really boom. Google any chart of the early 80s to today on gaming growth and piracy and you'll see. Blaming piracy for the failure of the gaming industry is the easiest cop-out ever. It is a problem, yes, but it's a very complex problem, one that doesn't have a simple answer like saying they're thieves, they help games' sales grow or any other argument. Piracy is one of the most complex social and economic events of our age and it can't be explained or dismissed with black and white explanations as I'm reading in this thread a lot.
In the end though, and pretty much like what happened in history almost all the time, the failure of a specific industry comes down not to piracy or any other sort of crimes but in the inability of that industry in connecting with their costumers, losing track of economic reality and crashing down in the process.