You will never stop piracy at all, and in some markets it is a good thing. By regulating something by government force you are only creating more crime in itself, and not solving the problem at all.
The problem is the industry is not keeping up with technology. If you could download video games legally and pay for them cheaper than going out and buying it at a store, people would do so. The pirateers will always bootleg no matter what, they are not your market nor are they your demographic.
How do you prevent someone from committing murder, stealing, raping, or whatever? You can't prevent it, you can only investigate and build a case afterwards and take legal action to that person.
You start to govern the internet, you just waged war with every hacker in the world, and who do you think will win that war?