The very basic fact is : THERE IS NOT A SUFFICIENT PROFIT MARGIN IN MAKING COMPUTER ONLY GAMES ANYMORE!! Just about every development house has gone on record as to this fact and they have all cited piracy as a significant factor in this
I'm not going to bother going through and countering every point you made, since that would be a waste of time. However, I am going to counter a stupid assumption that you seem to be making. No one, and I mean no one
is claiming that piracy has no impact on PC gaming. The only
argument is about the degree of impact. Apparently you, among others, belief that it is extremely high. Others, like Jerryk
believe that it is much less significant.
The reality is that no one is in a position to say for sure. However, looking at the situation gives plenty of alternate reasons for why PC sales are down. Very high on the list is one of the points you mentioned yourself - consoles have "caught up" in a lot of ways to the power/performance level of PCs. Consoles also offer numerous benefits that you don't get with a PC (unless you are quite technically competent) - the ability to use a big screen TV for output, the ability to sit comfortably on a couch and play, the ability to have friends over and play together, the ability to simply put in the dvd and have the game start up, etc. Furthermore, as an almost completely dedicated gaming system, you don't have to worry about upgrading it, and you can rely on it "just working" with any game that you buy.
So it's not a huge surprise that consoles have become more popular. The obvious next step in that line is the fact that it's no surprise companies have begun to target them as their primary platform. Less hassle in the form of tech support, a guarunteed install base, and multiple platforms to target. Even without piracy, I'd bet that most game companies would still be targeting consoles as their primary market.
So in conclusion, you may or may not be right about PCs "dying", but even if you are, that's no support for your "piracy is killing them" argument. There are plenty of other factors that are skewing things towards consoles, and there's no way to measure the impact that piracy is having.