People (as a whole) are scum; if they can get away with pirating, they will do it regardless of price or if they can afford it, and in the process make all sorts of excuse to justify the stealing. It's human nature; you can see the same with drug abuse, excessive drinking, gambling and smoking.
Oversimplification! Note, that because it is such a controversial issue, many people have certain rules about if, and when they pirate. Some people do it after they buy the game so (many reasons, the disc stays good, they can get other features, it might be easier) or they only do it when they know said company has already sold most of their stock. In my case, it is when said torrented media is either free or isn't being sold anymore (how can a company blame someone if they aren't selling it anymore?).
Also note the situation in which a person enjoys something they torrented, and thus decide to buy it anyway to make sure they have a legitimate copy.
Directly on the topic of "pirating (not torrenting) cutting into developer profit", I do not think there is a feasible way to determine how much money they are losing, as there are so many situations revolving around the act. My estimate is that most people who pirate (somewhere over 50%) would not buy the game anyway if they could not torrent it. Some do not have money (or are penny-pinchers), some think the game isn't worth the money, some only bothered to get the game because it was available to torrent. I think I am missing a multitude of other possibilities, but I don't recall them.
I have observed that companies haven't needed to cut costs because of pirating (they have increased them almost exponentially), so I assume they aren't being harmed by it at the current equilibrium. But then again, there haven't been many good games out there to pirate anyway. The bulk the fun stuff seems to be old games.
Pirating and torrenting in general seem to have had a lot of psychological effects on the populace, I think that list of effects is too complicated to measure accurately. But it seems to get added into the arguments for/against torrenting/pirating anyway.
I wonder about pirating music though, there are
loads and
mountains of free, good music of every type (it's everywhere!), so I don't see why people would care to pirate it.
On a related note, I have always been annoyed that after I get a game, they want me to buy the music separately to listen to (or they don't sell it at all). I've already bought the music as part of the game. Why do so many lock it in? (Bethesda for Oblivion and Morrowind did not do this, they set their file system up to allow full access, and editing. It is nice.)
Another one of my annoying experiences was getting Dark Messiah and being completely and utterly disappointed. The game was supposedly Might and Magic 10, but I discovered it was apparently a completely different universe from the previous games, it was of a completely different system, and it was a game I hadn't wanted to buy. I didn't even have a party, and I didn't even have a character I could name! It had turned one of the greatest role-playing computer games into a mindless first-person shooter! And I had discovered on install that there was a trojan in the game, it was even called "spyware pro". Like the company payed money for a better version of spyware...although completely disgusting (enraging!), this has not made me pirate games before buying them. Instead, I just ask 3-5 people that have played the game about it first. However, I have heard on this thread that some pirated game versions have been fixed and cleaned, so I might pirate it now.