There's going to be a free online arcade whether game companies allow an online library or not. Companies can spend billions of dollars taking down emulators and unauthorized game distributors and ways to make playing games in unauthorized ways harder, but it will always be a game of whack a mole. Game companies should focus their time and resources on making legacy titles accessible, whether that means creating a deal with online libraries or selling the files directly to the consumer for a reduced cost. At the end of the day, game companies spend more money trying to prevent people from playing legacy titles than they make on the legacy titles, so there is no benefit to the consumer or the company.

I think there's a fear by companies that a rerelease or remaster won't make money if the original is available for free, but the reality is that people will happily buy a remaster or remake if it's good despite already having the original game.