"In order for benefit denial to work, the EMA would presumably require the three major consoles to have some sort of activation verification function to ensure that games were legally purchased.
Correct me if I'm wrong, but isn't that what they already do? I remember the original Xbox had a challenge response function signed with 2048bit RSA specifically designed to verify if the game was legitimate (regardless of homebrew implications). I fail to see how this generates anything except another spot for something to go wrong (ever have the cashier forget to give you change? Now have him forget to activate your $60 game).
Honestly, the best thing to combat piracy is to release better quality games. I'm looking at you EA (a.k.a. carbon copy gaming).
If you're not careful, you're going to catch something.