Yes, it does. It benefits nobody. It makes companies look like bad guys, customers like criminals, and artists as out of touch.
I’m not quite sure what Ubisoft is thinking with their new “you must be online all the time to play our games,” but I predict it will fail spectacularly. Treating your paying customers like criminals is a recipe for failure. The pirates will circumvent whatever protection is there. It’s really a shame that cracked/pirated products work better than their legitimate ones. This isn’t limited to just games, mind you – cracked DVDs often lack unskippable menus and trailers, for instance.
Since I work for a software company, I make sure that my software (and games, movies, etc) are legitimate. It would be hypocritical of me not to. It just pains me that the games I buy for my PC come with this invasive junk that I just don’t want. I remember the bad old days of Commodore 64s with disks that had modified sectors to make them “uncopyable,” but the guys who wrote Fast Hack’em were always ready to go. Even before the internet having a connected system of Commodore user groups made distributing this stuff painfully simple. Even though the scale was weeks then versus days (or less) today, it was still pretty easy to circumvent whatever the publishers wanted to do. You would think they learned their lesson twenty years ago, but precious few developers around today were programming back then.
Dongle protection is actually the best solution, because you actually own something. The dongle can be moved from computer to computer, it can be sold or given away, and most dongles can be easily updated or programmed to give new features. Their main flaw, though, is being dependent on computer ports. There’s lots of parallel port dongles that can’t do squat these days because many PCs simply don’t have parallel ports (or ADB ports on Macs). However, so long as converters are being made for these, they should be reliable well into the future. USB dongles are also fairly simple hardware keys with standard APIs – unlike SecuROM and other schemes that attempt to thwart things on your system that you can use for legit purposes, like CD image mounters.
Fortunately, pushback has caused DRM to go away on the music front. Hopefully on games and videos it will go away as well if people fight it enough.