Making a system practically hack proof is not possible, making it uneconomically hack proof (i.e. it would take too long to hack / cost too much money) is possible, but at a big cost to either the users or the vendor.
The economics of it is... most people dont pirate games all the time, it's just phreaks like us
To increase the cost of games and hardware across a range in order to force people like us, the minority, to buy games would be economic suicide, especially for console companies.
The best they can do is prevent ordinary 'lay persons' from being able to copy games at home, and clamp down on the sites offering downloads and modifications.
I see all these stats about how piracy is costing the industry 2 billion quid a year. I dont know about most people, but if it wasnt "free" then I probably wouldnt buy it anyhow.
If they chose a 100% propriatory medium with a drive that could never read CD's / DVD's, made it so that the drive had a propriatory interface (i.e. NOT IDE / SATA) so you couldnt swap out drives for a regular one, made it so that all the I/O (network, smart card etc) was incapable of "streaming" a game in. That would make almost any console uneconomical to hack.