E3 is almost like a Super Bowl as the previous poster stated. And sometimes your team just isn't ready on the big day. Sometimes great teams head into the matchup with only half their starters. Sometimes they get crappy weather for their playstyle. But at the end of the day, you have to show up and you have to compete. It's the biggest game of your year, even if it isn't your best. And the humiliation is epic when it comes.
But now these companies don't have to put all their cards on the table. They don't have to suit up half their team and hope it gets them through the day. For us it takes away that spectacle, as much for the wins as for the cringe. Who doesn't have fond memories of E3 '08 when Nintendo bombed with WiiMusic? It's kind of a no-brainer for these companies not to have to be trotted out in front of us when they don't have things quite right. Serve up the goods directly to consumers when you're ready with a Direct or a Showcase, pop in at a few exhibition matches like PAX or GDC where you aren't expected to show the next holy grail of gaming and let the internet do most of the heavy lifting for your products.
It's certainly a loss for gamers. But, as a Nintendo fan, I much prefer the smaller showcases where less is on the line. Their potential for amazing reveals is sometimes just as high, but the expectations to see everything is much lower.