Couple things…
1. Source code is not the same as compiled binaries. What you have on your existing copy is the compiled version, not the source code.
2. Sometimes when you’ve “lost” the source code, you may still TECHNICALLY have it, but it’s on a medium that is obsolete and you cannot access. 5 1/4” floppies. A Zip Drive. Tape backup. Etc.
While data is often backed up, a question because how was it backed up and was that backup kept secure and validated functional. Magnetic tape can degrade. Hard drives can fail. Backup media can be misplaced (especially in the case of media held by companies that have gone thru various acquisitions). Employee A may have been the one in charge of the backup, but hasn’t worked there in X number of years so nobody there currently knows what became of the media. Or there could be actual disasters. Fires. Floods. Etc which damage the backup media.
Also, sometimes when they say they have lost the sources, they could be referring to some of the data used to put the game together, and not the final source code as shipped. Sometimes high res audio or images were produced for production, but it’s down converted to save space or for performance reasons on the original target systems. They may then lose track of the original high res versions that would be required for a remaster or rerelease on modern hardware, and the low quality versions that remain cannot be up converted to an acceptable quality for modern audiences and equiptment without prohibitive costs
To note… it’s not just games that have suffered this way. Babylon 5 was a television series produced in the 90’s that famously filmed in wide screen on film, and created their cgi effects in a near HD quality (although 4:3 for the televisions at the time). This was more expensive, but the production team felt it helped future proof what they were creating. Skip forward a couple decades, and the only version we can see today is very questionable quality due to decision made at the studio that owned the rights. They upscaled an old dvd release, which has introduced a TON of video defects that didn’t exist in the original source.
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