It may be a fictional loss now but as you say, the market is developing. Loss of someone buying a bargin bin title a couple years later is still a loss. More importantly, you are assuming a significant percentage of that developing market is capable and willing to recognize when the time of "OK" pirating is over and the time to start buying begins. Whether this is good for buisiness will not be apparent for another 10 or 20 years, when we see whether the relative handful of paying customers now are followed by the large majority of currently non-paying users.
Piracy is not always a loss... Some year ago, in China, you was with the free Linux that gov wich use and million of people with pirated version of Windows OS... Microsoft was happy with the situation...
http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134488/
By 2001, Microsoft executives were coming to the conclusion that China's weak IP-enforcement laws meant its usual pricing strategies were doomed to fail. Gates argued at the time that while it was terrible that people in China pirated so much software, if they were going to pirate anybody's software he'd certainly prefer it be Microsoft's.
Today Gates openly concedes that tolerating piracy turned out to be Microsoft's best long-term strategy. That's why Windows is used on an estimated 90% of China's 120 million PCs. "It's easier for our software to compete with Linux when there's piracy than when there's not," Gates says. "Are you kidding? You can get the real thing, and you get the same price." Indeed, in China's back alleys, Linux often costs more than Windows because it requires more disks. And Microsoft's own prices have dropped so low it now sells a $3 package of Windows and Office to students.
Now that the Linux threat was removed from China, Microsoft is the master there... and recently, a lot of China people fear the "black screen of death", a new protection again pirated version embedded in Vista software...
So, yes, piracy can be bad for everything who is free ( in these example Linux )... some business organize themself leak of their product... it is cheaper that a big worldwide publicity campaign... good thing is that Microsoft have adapt the price of his product in function of the income in the country where they distribute their product... better a million time a little something that nothing at all...
Now, let see the Stardock case, sins the game and piracy... Stardock don't care to much about piracy, and their product don't use any usual protection system ( only a serial )... this lead to a cheaper product ( don't need to pay for a protection system )... Stardock have choice to have enough low price when compare to other distributor, have ease the work of pirate due to the non copy protection... result for sins was around 1 million $$$ invested and a return around ten time bigger... at the technology level, with Sins, Stardock have choose a software who was able to reach and run on a lot of computer, low end system are able to run sins... the people who own these low end computer can be poor people, without a high band internet connection, not able to download gb of pirate date each day...
My point is simple... piracy is bad but fight it lead to no valuable result and cost a lost of money ( that honest people finance by buying legal product )... i think that the Microsoft way or maybe the Stardock way who is better... in place of swim againt the flow, they float and follow the stream... they create cheap product, who can be used by a lot of system... Result is mone money return in the long time for lower expense... Only request for so system to work is to have a good product !!!
Piracy are like the hookers... they have always exist and will always exist... use them for your benefice if you can, fight them is a loose of money that your honest customer need to finance... else ignore them... use the energy and money for make better product in place of fight in a war that you cannot win in the long term...