Games developer Sega has shut down more than 60 websites and 125 online auction sites it claims were selling pirated Dreamcast games.
The company has also joined forces with Yahoo, Lycos, Excite, eBay and Amazon to stop auctions and sales of illegal games and pirated boot disks.
The Dreamcast game system is regarded as one of the most secure digital entertainment devices on the market, with internal copy protection and a CD that holds nearly twice as much data as an ordinary disk. But illegal copying is a major issue for all games developers, and experts say the problem has grown worse because of online file sharing techniques.
Peter Moore, Sega president and chief operating officer, said: "Pirates are parasites that hurt this community and will not be tolerated by Sega."
The company is urging consumers to check that their games CDs are genuine. Legal CDs should have three visible tracks on the underside and should be silver, not black or gold.
The Interactive Digital Software Association, the gaming trade association, estimates that illegal copying of games cost the industry $3.2bn in 1998, although not all of it is down to online-based piracy.
In June, 13 computer and video game companies, including LucasArts Entertainment, Sony and Nintendo filed civil lawsuits against six individuals whom they allege have operated websites selling hundreds of illegal copies of their top games.
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