Everyone is busy with stopping piracy, but nobody takes a look at why it is happening and taking away the cause of piracy.
Ofcourse free is very cheap, you'll never be able to counter that. But people will be more likely to pay for your game when it's really cheap (say in the range of €2 to €5). Providing access to additional payment methods is also a good idea, as some people become able to pay as they don't have access to a credit card.
Game quality is also important; people want value for their money... currently they can't be certain of that, so they download the game they think is interesting first, before they even think of buying it. Once downloaded, it gets a lot more difficult to buy the game in question (the user already has it).
And then there's the famous DRM. Digital Restrictions Management. Nearly every type of DRM has it's share of problems (word choice deliberate). If it doesn't cripple your computer, the game stops working after N years, because the producer decided that you should buy the next edition of the game.
And *gasp* people do not like that. Gosh. Strange. Extra reason to download a cracked version of that game.
Money poured in DRM is also money not invested in actual quality of the product.
End result: investing in DRM is actually having an effect of increasing piracy. In addition people will be less interested in buying your products, giving you less money to invest in new games.
Nintendo is investing in piracy, so they get piracy.