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They must of realized that E3 grew to be far more than they intended initially, and the force of the industry that drove it to be larger than their plans. This is likely true in light of the recent economic news and climate.

E3 is like Comicon for everyone involved with videogames, including fans.

If they want to have a smaller show, they will likely end up doing something different, or it is possible CES will fill the roll they intended.

On the plus side, the press conferences will have to cater more to fans of videogame systems, and not just the money men.