Not really, its because the developers are greedy I feel like. Have you ever seen John Carmack's House. I met him when I was 14 years old, before I ever began playing FPS of any kind. He is totally rich, yet his company charges ridiculous prices for games that are only moderately innovative.
Piracy is high, but only to a degree. I could see paying $10 for q3. Maybe $10 for wolfenstein if its as good as you guys say. $50 is a really steep for a game that you only get relatively low level licensing too. They dont' even give you the source code with the game. Nor is there any guarantee that once the game is out that a quality point release will be maintained, just look at the 1.27x series for q3. Also, consider this, with a video game you have no resale value. In fact, to my knowledge it may even be illegal to resell video games once they have been opened/installed.
I am a developer myself, I make a living doing programming. Its disturbing to me that developers like ID overcharge for their software and it seven more disturbing that people pay for it. No wonder people pirate it.