E3 was hugely expensive, and that was a long-standing criticism of it that predated the rise of Nintendo Directs and Sony's State of Play. In 2007, they even tried to scale it down to a "strictly business" form, the E3 Media and Business Summit, which was basically like a business seminar. Nobody cared about that, so they tried to go back to the glitz. The other problem is that inevitably, Microsoft, Sony, and Nintendo would drown everyone else out and suck the oxygen out of the room. Mostly, it was Sony doing that, not because they intended to, at least with regards to their third party partners, but simply because they are the largest single presence in the gaming world.
Companies just decided it was more cost-effective to do their own presentations on their own schedules. And frankly, I like the Nintendo Directs approach better. I think part of why Nintendo prefers them is because Nintendo now seems to prefer making its major launches in spring and summer rather than Christmas, strategies that worked well for the 3DS and Switch. Most of what E3 showcased was for holiday announcements.
I think E3 was also undone by the fact that it was an exclusive club for business and media, and that's really kind of a wasteful for what amounts to an echo chamber. If E3 had been open to the public from the beginning, it might have survived. Instead, shows like PAX filled that niche with both press events and public events. Tokyo Game Show likewise is open to the public.


