both are illegal.
however most people take a moral stance that live consoles should be supported, where as old console do not create profit any more, so no harm will come of it.
of course many developers reuse ideas.
and nintendo is set to gain huge profit by selling old games on the Wii, and in its constant ports of NES and SNES games to the GBA, and further ports of N64 titles to the DS.
are we sure nintendo is as innovative as some like to believe...
of course microsoft ports old titles to the live arcade, and sony is set to re sell classic psone titles, so these titles may become more of an issue with regards to legitimate use
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