I haven't played long enough to let the timer run out to find out.
I'm a little disappointed by the game, I thought the game & watch stuff would be just like 1 or 2 levels, thrown in for humorous effect. I thought it would be a tongue in cheek adventure kind of like Scott Pilgrim, and that it would be a video game with meta-humor about video games.
But basically, the game and watch stuff IS the focus of the game. Every now and then you get action levels that remind me of Viewtiful Joe (without the bullet time stuff).
I'll keep playing it for a while, but it's probably not going to hold my interest like Mutant Mudds or anything made by Wayforward did.
I do like it, I'm just trying to wrap my mind around it right now...maybe I'll even decide it's my favorite game ever once I figure it out, I don't know.
Late post, but you get a game over if the timer runs out. A continue option appears sometimes, but I never thought about it. I think it appears if you quit the game, starting you at the nearest G&W level.