I don't think your video or title fit with the spirit of the post you are working from. I believe this is a link to the full post:
http://www.quartertothree.com/game-talk/showthread.php?t=42663 While the section on piracy was a significant part of his post, I don't think it was an overly significant part of the spirit of his post.
I feel like after watching that video that you simply saw a large 70-85% figure on piracy and ran with it. He did say all of the things you said, but when taken in context of his whole article I don't feel like revenue "lost" through piracy was his big concern or the company's/game's big stumbling block.
It seemed like his biggest concern was people's perception of the game. The copy-protection's reaction to pre-release pirated copies left the impression of a buggy game. Reviewers giving the bug reports credence and gamers slamming them on the support forums made the impression even more negative. Obscure hardware problems and people's general lack of technical abilities added their share of negativity to the general perception.
Their copy protection issues are a by-product of piracy and do cause problems, but it seems to me that some better error messages might have helped relieve this. The real damage here came from the perception that the game wasn't ready for release.
The media making mention of the copy protection related bugs gives them credence. You are supposed to be the experts and your word goes a lot farther than the average forum poster. Much like the real culprit that killed IL will be construed as piracy based on your article, despite what the original post might have said.
To preface this next part, I'm unsure as to how THQ's financial picture on this game impacts Iron Lore's financial situation. I would assume that they are however similar.
Titan Quest did okay. We didn't lose money on it.
The above quote leads me to believe that the reason they shut down was more a sign of the economy or other bad choices in their organization than piracy. If they simply broke even on the game, then they managed to recoup invested money as well as pay their staff.
A young company who manages to get their name out there on a reasonably good game and not lose money doesn't close their doors because of that. They've now got experience and a large title with fair market penetration under their belt. They would now be more likely to get investors as well as more likely to not make rookie mistakes. Perhaps it wasn't a huge success, but I don't think the game drove them to financial ruin.