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The answer is both no and yes. You do not need custom firmware installed to run UMD games. UMD games are the disc-type games that you buy at the store. You will, however, require a custom firmware installed on the psp to run backups which are copies of the UMD (disc-type) on your memory stick.

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15y ago
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Q: Do you need a customwearfear to put games on psp?
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