You forgot another reason: players just got fed-up with the cash-up-front and all-sales-final combo mentality of publishers combined with an ever increasing number of high-profile duds. When the games were $25-35 CDN (back in the 1990s) new and $10 in the bargain bin, people could simply risk buying them at a whim and throw them away when they did not like them. Now combine prices in the $60-80 CDN range ($45 or so discounted after several months) and the fact that the game review magazines (and most internet sites) are nearly universally bought-and-paid-for shills for the publishers (or simply focus on the wrong elements of the game) and it becomes a very expensive and highly unrewarding crap shoot.
Demos do not help because like the review sites, demos are usually shamelessly doctored to operate quite differently from the product sold.
In short: the marketplace has been rigged to give huge and unfair advantage to the sellers. Some people mitigate this by using their social networks and borrowing games/books/what-not from friends, but for many this is not practical.
And so over the years some have deployed a simple strategy (which also applies to all other media like movies and books): they play the game and only if they like it, they pay the authors. Junk (i.e. majority of products) is simply discarded. This returns the balance of power back to the consumer and rewards actual creativity as opposed to cookie-cutter corporate crap.
Naturally the manufacturers of cookie-cutter crap dislike this idea very much, they would have you pay up front and screw you if you do not like what they put in that shiny wrapper, which I think is one of the often missed major motivations behind DRM across the so-called "contents" industries.
