It's nothing to do with piracy. White Wolf's focus has moved to MMOs and is less on RPGs now (like at many companies, sadly). And they are doing less print publishing and more PDF - which is always going to be less successful regardless of piracy, given that the average gamer still buys books. If piracy was their big problem, you'd think they'd move to print and away from PDF! Not that either print or watermarking is any impediment at all to piracy (see: any torrent site).
Print has wider distribution, more people buy print; if you are publishing PDF only you can expect a fraction of the sales you would in print. PDF is a great alternate channel but more of the world is offline than we give it credit for nowadays.
To rebut common claims:
"Publishers make better profit with PDF" is not true. Some may - but for example Posthuman Studios at their seminar last Gen Con was asked directly "is it better for you for me to buy your books in PDF or print" and the answer was "we actually get a higher margin off print." Eclipse Phase, $15 PDF $49.99 print. (Not coincidentally, there's a 70% difference between the two prices, a number often cited as how much the printing cost of a product is.) Evil Hat Games releases their numbers too and they also note they make more money per print copy.
"Nowadays virtual sells as much as print" is also false. Looking around for publishers that are transparent with their numbers, Evil Hat reports that the two DFRPG corebooks in Q3 2012 sold 1112 physical and 282 PDF copies.
Now, for White Wolf having PDF sales makes sense especially for the "long tail" of their huge back catalogue, where they make recurring sales at practically zero incremental cost to themselves. But it does discourage more new product generation.
Chalking the reduced focus on RPGs up to piracy is the usual "talking without any data to back it up;" usually one requires proof of an unsupported assertion rather than having to gather proof it's false.