I think that's the story being told, but I think the real problem is that the Saturn sucked, and the 32x, and the sega cd. Sega killed so much of their good will, that they barely had any customers left to pirate games. I only know one person who had a dreamcast, and they mostly had legit games with a few pirated ones. On the other hand I knew atleast 10 people with modded playstations, and mostly pirated games. I only buy Nintendo consoles, so I remember being jealous of their ability to pirate. Though I just remembered the kid who was doing the mods having a zip disk adapter for his N64.
Pretty much all Nintendo consoles have been pirated, though.
The story how the Gamecube was cracked is also quite interesting, ironically also related to SEGA. The way they cracked it was with the GCN port of Phantasy Star Online by them. The first thing that game did when it connected to the SEGA server was to download a binary patch and execute it. People figured out they could just DNS spoof the server and run pretty much anything they wanted.
You needed a pretty specific set of stuff for that to work, though. You needed an early version of PSO as well as a Gamecube broadband adapter. By pure chance I had that back in the day and I remember getting this to work, attaching the gamecube to my pc with a long crossover cable between two rooms, trying to figure out the network settings and running the spoofing software. Good fun.
Piracy on the original Playstation was gigantic and also probably a big reason for why they ended up dominating the market. I know a ton of people that picked one up over the N64 because if you got a mod chip put in and new someone with a CD burner you could expand your game library for the cost of a rental.
I don't think any piracy will ever compare to DS piracy. You could put all the games you wanted on a micro sd card, stick it into the R4 (or any of it's many clones) and there you go. And for the last couple years of the DS these cards could be had for under $10. Even the Wii required some effort to soft mod, and you still had to care about updates. The DS was totally broken however.
