I think you'd be surprised.
The majority of this forum will download stuff off the net.
Even though no one will admit it....
Considering how much money the games industry is making, I can't say I believe it. Piracy is a minority, and it's mainly like Wolfe below says, an issue in countries like China and Russia.
If piracy was that big of an issue, would Harry Potter have made as much money as it did? Would games companies like Activision still be in business? Nah they wouldn't. The fact that MW3 made $1bn in sales in the first 16 days shows, if you make a product people want, they will buy it, and as Gabe Newell said, "piracy is hardly ever a money issue, but a service issue. Provide people a good service and they will buy your product."
Luckily people on benefits aren't a majority either - yet a small minority does a hell of a lot to ruin it for the honest workers in terms of tax, etc.
And I think you'll find that in much of the developing world, such as China, pirates WILL be the majority.
.
A minority can ruin it, but it doesn't effect things as much as people may think. They count each individual download as a lost sale. How many times have you downloaded something, there's been a problem with it, so you have to download it again? Or maybe you lost your data on your HDD due to a mechanical fault so you had to download it again? Or maybe, even, you downloaded a game/CD to gauge what it was like, and then bought it after because you enjoyed it?
Stating 1 download = 1 lost sale is very far fetched, and even though MW3 had 3,650,000 downloads illegally, you can't count every single 1 of those as lost money, because it's not the case.
Me personally, I have downloaded music in the past, but because I downloaded the music I found I liked a band, so in turn I went to go and see them live and bought their CD's, I probably spent more money going to see them live and money on their merchandise, than I ever would have done on some CD's alone.