The first person shooter about a space marine with a penchant for off-color humor who battles aliens with increasingly destructive weapons, was to be the fourth installment in a series of games that garnered critical praise and generated controversy for its depiction of women. After 10 years in development, 3D Realms, the studio behind the game, announced it was shutting down in 2009.

The game is being finished by Gearbox Software and will be published by Take-Two Interactive, maker of the “Grand Theft Auto” series. The game is being shown to consumers and the press for the first time at a video game convention today.

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Two lower courts struck down the law as an unconstitutional restriction on freedom of speech.

How the high court rules could affect videogame makers such as Activision Blizzard Inc. (ATVI), producer of “Call of Duty,” and Take-Two Interactive Software Inc.’s (TTWO) Rockstar Games, which makes “Grand Theft Auto.” The case could also have implications for the broader entertainment industry, specifically for producers of violent movies and television shows.

Last week, the court took a broad view of the First Amendment when it struck down a federal law banning depictions of animal cruelty. The court said the law was too sweeping in restricting speech.

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No one should have any hopes that Carl Icahn, who on Thursday disclosed an 11.3 percent stake in the video game maker, can ride to the rescue. Not only have his efforts fizzled at several other companies in the past few years–Yahoo (YHOO), Blockbuster (BBI), Motorola (MOT), to name a few – but the fundamental issues at Take-Two aren’t easy to fix.

After all, the current management team led by media veteran Strauss Zelnick, was voted in with the support of another group of investors in a proxy battle in 2007 amid unhappiness over the previous management. So far, the Zelnick team has conspicuously failed to resolve Take-Two’s major challenges.

Consider: In fiscal 2007, the year the Zelnick team took over, revenue was $981.8 million and the net loss was $138.4 million. In fiscal 2009, which ended Oct. 31, Take-Two reported a loss of $137.9 million on revenue of $968.5 million. It has projected another loss next year. One real difference between 2007 and now: Take-Two’s stock price, around $20 when Mr. Zelnick and colleagues took over, is today less than half that level, even after a bump on news of Mr. Icahn’s increased investment.

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The company didn’t say exactly what prompted it to end talks with its smaller rival, though presumably it had something to do with Take-Two’s bashing of EA’s $25.74-per-share bid as too low and the company’s acquisition strategy as “mystifying.”

“This was never a must-have proposition, but we respect their people and products,” Owen Mahoney, senior vice president of corporate development at EA told The Wall Street Journal. “We don’t need Take-Two to make EA successful.”

Hence, EA’s repeated extensions and revisions of its offer. …

Anyway, this may not be the last we’ve heard of a deal. There’s still a chance that EA might return to the table. “If Take-Two’s stock price settles back into the teens, we could see them come back again in a few months,” said Michael Pachter, an analyst with Wedbush Morgan Securities. “They walked away, but that doesn’t mean they won’t look at it again.”

Take-Two shares plunged 22 percent in pre-market trading on the news.