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When people watch pirated movies instead of paying for them through box office tickets, streaming services, or rentals, the film industry loses out on that income. This is a major blow, especially for big-budget films.
Lower profits lead to smaller budgets for future films limitating special effects, sets, costumes, and even actor salaries, potentially affecting the overall quality of films.
The film industry employs a lot of people. Fewer films due to budget constraints basically translates to fewer jobs for actors, film directors, camera operators, film editors, and other film crew members.
That being said, if studios are not making money from their films, they will be less likely to invest in new film projects, especially risky or innovative ones stifling creativity and leading to a more homogenized film industry.