The Beach Babes Game Over is an ending which occurs if the party loses to the Nereid during the Return to Mermaid Caves.
Upon losing to the Nereid, Eric(a) wakes up to the spirit trying to give Veronica breasts, the recipient violently objecting moments before having her brain shut down. Alice can barely persuade her before having a dick-shaped gag shoved into her mouth and made to practice sucking on it frantically. Eric(a) then realises they cannot control their body due to a paralysing poison, and the Nereid reveals she will "re-educate" them as the sluttiest bimbos to ever walk on land. Eric(a) can't get a word in before the Nereid puts them under her charm.
Several years pass, and everything that happened in the caves is but a hazy memory to Eric(a). In the end, the Nereid kept true to her promise, sending the group back on land and restore their human form, albeit with their personalities irrevocably changed: Emmy, Nikki, Allie, and Vivi, all beach blonde bimbo babes with barely any resemblance to the old Cutie Knights, set out to have a competition every day to see who fucks the most boys and girls.
Eventually however, Nikki slowly recovers - possibly due to her nature as a succubus, more likely because she was already being a ditzy blondie before the change - while the other three girls remain permanently reduced to beach sluts. Even Marianne can do very little to reverse the effects, but on the positive side the four girls have re-established themselves as the Cutie Knights, with Nikki somewhat enjoying her status as the smartest and most responsible member. As for Eric(a), with their old identity gone forever, they only remain as a horny, happy bimbo named Emmy until a story that would be told much, much later.