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If time runs out, you might be able to keep playing to get a bad ending rather than have an immediate Game Over. Some games have to be completed in their entirety under a single time limit typically in these games you can continue if you die, but the timer just keeps going. It was an arcade mechanic that carried over to the home consoles despite serving no purpose there (at least until the rise of online play), and you'll notice that wrestling games lack any kind of timer despite falling under the same genre they originated on home consoles (MMA and boxing games have timed rounds because the actual sports do). In a similar vein, this is why fighting games have the ubiquitous 99-second timer.
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Many older arcade racing games had stricter time limits where unless you were moderately good, you were destined to run out of time newer games have bigger time limits that aren't much of a threat unless you're pathetically slow or stop playing. In a few cases, having the timer run out is the only way to get a Game Over, with all the other obstacles in the game merely serving to make the player waste valuable time. Level timers originated in arcade games which needed some kind of mechanic to discourage players from hogging the machine without putting in more coins, and spread to many Nintendo Hard console and computer games that aimed to provide arcade-style gameplay. There may even be Power Ups that extend the time limit a little. However, in some cases the clock is implacable and continues to tick regardless for example, online games typically measure time by the server's clock, rather than the player's, which can add a frustration if a network communications error breaks their connection (as even time spent attempting to reconnect and re-login is counted against the mission clock). Exactly how stingy the time limit is varies Turn-based games will usually measure time by the number of "rounds" or "turns", and even real-time games will generally pause the clock when the player is busy accessing their menu screens (instead of playing the actual level). Timed gameplay sequences generally show their countdown onscreen, allowing the player to know their Exact Time to Failure. This can be particularly jarring, since most gamers are used to being able to Take Their Time, and (aside from the occasional Time Bomb and/or Collapsing Lair) the reason why a given level should even need a time limit isn't always apparent. Quite simply, the player is given a finite amount of time to complete a goal, with the penalty for running out of time being Game Over or the loss of one of their Video-Game Lives.
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Yahtzee, Zero Punctuation, on this trope causing him much frustration in Halo Wars
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