Piracy was by no means the end of the DC, but if you look a little closer at the numbers, it does have some bearing.
If you look at the sales numbers in North America for the DC, it sold around 2.5 million units by the end of 2000. NFL2K and NFL2K1 was sold to 1 out of every 2 owners (North America) that bought a Dreamcast within the first year. I'd guess 70% of those NFL fans didn't wait around for the PS2 and the next Madden, so they bought into the DC and its NFL franchise. Other sports fans made
6 out of the top 10 DC games being sports titles. The following year NFL2K2, and the rest of the 2K sports titles just kind of came and stuck to store shelves.
If you look at the sales of the Saturn in North America, it sold somewhere around 1.5 to 1.8 million units. Sega didn't have a real NFL title for the system, but it had its little core base of diehard Sega gamers that stuck with the Sega console. I have little doubt that without NFL2K and the rest of the 2K sports lineup, the DC would have suffered a simular fate in the US.
Once you strip away the casual sports gamers that moved on to PS2, you're left with a small but dedicated group of users that was probably no bigger than those that stuck with the Saturn, but at least the Saturn had 5 million Japanese systems with a dedicated fanbase, unlike the DC that stumbled everywhere outside of North America. The real question then becomes: "What are they buying?"
Outside of those sports franchises, only a handful of DC titles were selling more than 500K. It was titles like Shenmue, Phantasy Star Online, Resident Evil: CE and Crazy Taxi. Capcom releases titles like Cannon Spike, Street Fighter III and Marvel vs. Capcom 2, but they aren't selling over 100K and neither are other 3rd party titles.
What do those number add up to?
It appears that most of the DC owners were either fans of a few Sega franchises, fans of Sega, Sports fans, or into buying the latest thing. Those that stuck around probably weren't in the sporting segment, since EA was on the other console, the Sonic fans were waiting for the next game in the franchise and the remaining crowd was pretty segmented on what they wanted to play.
Can you imagine now, if 1 in every 7 DC owners (the rest moved to PS2) had the ability to play free DC games and opted not to buy the game instead. If Capcom had a title that could sell 40K, but 5.6K went to piracy, the numbers then drop to a title selling only 34K. The numbers get even more disappointing to a lesser known title. Does a publisher stick around, or do they take their chances on a console with more competition, yet a better chance that 100% of their product was sold to someone, instead of copied?
Even Capcom stuck around with the Saturn, long after it was pronounced dead. I don't recall them doing the same for the DC.