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As someone noted above, the E3 Business and Media Summit or whatever it was was the start of the decline. It also didn't help that the console makers were using E3 to promote non-gaming bullshit over actual games over that time period.

It also would have helped if E3 had actually been open to the public. All that pomp and circumstance for a trade-only event just seems like a waste in general. TGS was always more exciting to me.