No developer hoping to earn the goodwill of its players is going to trade flexibility and customization in favor of security. Piracy will continue to happen, but as long as the game has a strong following among it's audience, it will be successful. It's not as if you need UWP to reach your sales targets with zero instances of piracy.
Regarding mods, look at the response from Fallout 4 modders when Bethesda offered approved mods for consoles. Many just shrugged it off. There were modders who simply announced that they won't port their mods to consoles. UWP restrictions would have a similar response.
Figured I'd chime in. Bethesda's games are my poison.
On the subject of piracy, Skyrim was pirated to hell and back, yet the profits were several times more than the budget put into the game; it was Bethesda's most successful game ever. Then Fallout 4 came about, and the same thing happened. Extreme amounts of piracy, yet profits were the best Bethesda's ever seen.
Skyrim grossed 30 million sales in 2016, five years after release. 7 Million were sold on the first week.
Fallout 4? Bethesda sold 14 million to retailers within the first 24 hours of it's release. Taking VGChartz's stats for PS4 & Xbox sales, with Steamspy's for Windows, we're at 16.4 million sales a year and a half after release.
Piracy isn't an issue if the game has worth. It's an issue if the developers made a bad game.
As for mods, yeah, the console modding scene is an afterthought. For Xbox, there is no script extender, which is what all the cool mods use. For PS4, you can't use new assets. If the mod requires files other an the .esp (pre-baked NPC face maps, editing batched objects, scripts, sounds, animations, etc.), Sony won't allow it.
Modding requires an open platform to be successful. Bethesda on Windows hasn't got a properly open one, as it's an absolute nightmare to create animations, and there's a bunch of hard-coded stuff. But it's far and away better than what the consoles have.