One can only imagine who is still trading shares of video game maker Acclaim Entertainment (Pink Sheets: AKLMQ), considering it filed for bankruptcy earlier this month. Yet there it is; shares are trading at $0.02, up 12.5%.

This is not a company that will be coming back from the brink. It's not a Kmart (NASDAQ:KMRT) that entered bankruptcy court with the purpose of reorganizing and emerging a healthier company. Acclaim filed for Chapter 7 bankruptcy, which lets a company eliminate most of its debt, but it's required to sell off property not protected under exemption laws. The company will be liquidated, and its $47.3 million in assets will be disposed of.

It's already fired 600 employees and closed offices in New York, Austin, Texas, and the U.K.

Acclaim is one of the oldest video game makers around, having lasted more than 17 years. Yet during a time that saw the rise of competitors Electronic Arts (NASDAQ:ERTS) and Take-Two Interactive (NASDAQ:TTWO), it was never a popular company with gamers who viewed it as taking big-name licenses and running them into the ground. Some of its franchises included Mortal Kombat, Myst, Batman, Spider-Man, The Simpsons, WWF, and NBA Jam. The titles were impressive. The results were less so.

Fool contributor Jeff Hwang has chronicled Acclaim's stumbles throughout the year, pinning its hopes for rejuvenation on games tied to Disney's (NYSE:DIS) hit show Alias and a racing game called Juiced. While the expectations were high, Alias was something of a letdown, and Juiced was still finishing third to Electronic Arts' Need For Speed series and Sony's (NYSE:SNE) Gran Turismo franchise.

Acclaim isn't the only game manufacturer facing financial trouble. Eidos (NASDAQ:EIDSF), the U.K.'s largest game publisher, is shopping for a buyer following a string of disappointments. There have been a number of smaller publishers as well who have been gobbled up by Japanese and U.S. companies, paring the industry to a few global giants.

When David Gardner first picked Electronic Arts as a Motley Fool Stock Advisor pick back in 2002, he noted the $9 billion industry was estimated to grow to $22 billion worldwide by 2005. So with such growth anticipated, why is it hard for companies to stay in business? Games are expensive to make, and there has been a certain amount of oversupply. The winnowing process of game makers is only natural. But it will be only the strong that survive as new consoles replacing Sony's PlayStation 2 and Microsoft's (NASDAQ:MSFT) Xbox appear by the end of next year, challenging developers' skills.

It's the reason why you see so many games focused on movie or TV show tie-ins, or on established franchises: Developers know there is a built-in market. Yet it wasn't enough for Acclaim to stave off bankruptcy or its asset sale.

While EA, Take-Two, or Atari (NASDAQ:ATAR) may be interested in scooping up some titles, when the shares finally stop trading, who among those trading the stubs today will be left holding the bag?

Fool contributor Rich Duprey is eagerly awaiting the debut of Halo 2. He does not own any of the stocks mentioned in this article.