And ultimately, it does work.
If the goal is to keep people from playing the game whether they paid for it or not, then yes it does work in that regard. If the goal is to increase sales, then no, I seriously doubt it does work because first, most if not all of the people who unlawfully download the game aren't going to spend the $50 on it, and second, the horror stories of this DRM are going to scare away potential customers.
DRM using Internet activation will eventually just become one of those minor irritations that everyone has to accept
Unless money is no object to you, I'd call not being able to play the damn game after spending $50 on it more than a "minor" irritation.