He started off with some figures, piracy cost the industry $3 Billion in 2004, and that is not counting the rather nebulous category of Internet piracy which can't really be measured directly. It hurts developer morale, can delay a game by up to a year as in the Valve source theft, and generally makes things harder on the team.
ID has had it tough, every single game they have made was leaked in some form or other before release, from the prerelease Quake source code to the Doom 3 'Alphas' that were floating around. There is even a purported copy of the upcoming Enemy Territory: Quake Wars floating, but that is not totally confirmed. Basically, try as they might, everything they do has gotten out.
Part of the problem is that security is rarely straightforward, you can build a firewall from hell, but there will always be someone inside that puts on a remote control program because he needs to do something, and you are p0wned. Maginot lines have a bad name for a reason.
You can also secure everything internally, but you have to give your program out in the course of business. GPU vendors need the code to optimize and test, the press needs preview and review copies, and in general, things need to get out.
Once they are on the net, you are sunk, there is little you can do. As soon as a hot property hits the net, it is over, there will be 10K copies in a day, and it will grow exponentially. From there, you are left with fruitless heavy handed things like the RIAA suing grandmothers. To ID's everlasting credit, I have never heard of them pulling an RIAA or Blizzard level of asocial evil.
One thing you can do is play patch warfare. If people put out hacks or cheats, you can break it in the next patch. This is a cat and mouse game that rarely achieves much of anything, patches are cracked almost as soon as they come out. There are things you can do to level the playing field a bit. The CD key authentication process is still uncracked from Quake 3, so it worked in some ways. That said, the basic mechanism is not broken, but it can be worked around. Cheats and patches are still a mixed bag.
ID has also tightened physical security, their subterranean lair of decadence is not as open as it used to be, people in general are not allowed to waltz in and play around. Things send out have dongles, so if the other people don't secure the data, they will at least not share the key.
On the internet side, you can do the guerrilla warfare thing, seed bad files, spoofing servers, and in general make life a little harder for people, but in my opinion, this is pretty fruitless. The same goes for the usual DMCA takedowns, lawsuits, and generalized legal actions. It can be done, but have you every heard of anything going from available to not available because of any of this?
ID seems to have a realistic view of piracy, and Hollinshead was by far the most pragmatic speaker I have ever seen on the topic. He realizes the scope of the problem, the futility of many proposed solutions, and is taking concrete steps to minimize piracy. If everyone was this smart, the world would probably be a much better place.
So where do you go from here? (Note: First person who says "the pirate bay" gets a nasty email back) You can move to a subscription model like MMOs, but that has as many down sides as there are up. You can do an authentication program like Valve did with Half-Life 2 and Steam, but keeping a chunk of code away from users also is fraught with problems.
You can crank up the legal side a bit, automated takedown notices were mentioned, as well as other methods ranging from spoofs to the FBI, but again, these have down sides and are very country specific. The internet scoffs at such borders, so you are back to yelling at the person in the next yard who is already adept at ignoring you.
The last option is the most troubling, going cross-platform, or worse yet console only. ID is doing the cross platform thing for ETQW but that is it for now. Others, Epic being the biggest name there, are focusing more on consoles than PCs, a sad but understandable thing.
What it comes down to in the end is that ID has gotten hit hard by piracy from the early days to their upcoming games. There is no magic bullet, no canned solutions to a rapidly changing problem set. You do what you can with the tools you have in the most creative ways you can. Nothing seems to be absolute here, nothing is final. Todd Hollinshead did a good job pointing this out, and laying out a path to the future. Good luck. ยต