Speaking today in a keynote speech at the Mip TV conference in Cannes, Darroch identified piracy as one of the main threats "capable of ripping value out of content creation".
Last week, the government's digital economy bill was voted through parliament, including new powers for combating illegal peer-to-peer file-sharing.
Under the system, which is being handled by Ofcom, internet service providers will be expected to cut off persistent online copyright pirates as the most severe punishment in a 'three strikes' approach to the problem.
Despite accepting that piracy is not a new threat facing content owners, Darroch said that the game has "changed significantly" in the shift to digital media, and the "stakes will only get higher as faster broadband speeds become more widely available".
"No one here today will be under any illusion that illegal downloading is not a niche activity by a few geeks. It is fast becoming seen as normal practice," said Darroch.
"That is dangerous. We need to see online piracy for what it is: theft, pure and simple. It is often thought of as a victimless crime, but that couldn't be further from the truth. If we allow piracy to weaken the business case for content investment, it will ultimately hurt the interests of creators, distributors and consumers of content."
However, the new file-sharing powers have been criticised by some ISPs on grounds that they will unfairly punish innocent web users and increase instances of hacking as pirates shift activity to other internet connections. TalkTalk, which has over four million broadband subscribers in the UK, recently stated its intention to resist the new measures unless specifically ordered by a judge.
In his speech today, Darroch said that Sky does not share the ISP's opposition to the powers as it sees inherent value in protecting the rights of content producers.
"At Sky, we're acutely aware of the responsibility that comes with licensing valuable content from our partners. That's why we have always sought to maintain the security of our satellite platform and why we've been active in working with government and industry to tackle online piracy," he said.
"After all, as a content owner and an ISP we can see the problem from both sides. It seemed immediately obvious to us that rights owners and ISPs have to work together to explain the issue and deter those who seek to access digital content illegally.
"Unfortunately, in the UK, not all ISPs were prepared to play ball, which is why, in the end, the government had to legislate. That law was passed by the UK parliament last week and - with the right commitment to make it work - it should make a big difference."
Yesterday, Ofcom promised that anyone accused of file-sharing under the new system will get access to a "robust" appeals process before their web connections are blocked.