Contrary to reports across the web, E3 has not been cancelled. Next-Gen had hoped that they would blow the lid off of a hot story by revealing that the show had been cancelled, but some quick fact checking shows that they are simply incorrect. (Note: NG has just changed their story from "EXCLUSIVE: E3 CANCELLED" to "E3 Finished as Big Exhibs Pull Support," and the text of the report has changed significantly.)

Sources close to the Entertainment Software Association (ESA) tell Ars Technica that the show can and will go on, but that big changes are planned. The "Electronic Entertainment Expo" (hence E3) started in 1995 as a small but interesting annual convention for gaming, following roughly six months after the once-popular annual COMDEX computer trade-show in Las Vegas. The show has grown immensely in popularity, and that appears to be the problem.

Sources say that two major factors have led to the decision to transition the show to a more "closed-door" event. Both, coincidentally, were major reasons for COMDEX shutting down: cost and access. If you've never been to E3, let me describe it like this: long lines, truckloads of people, video games everywhere, and really fancy "booths" (where booth sometimes means basketball court-sized display area). As with COMDEX, the major players are reportedly tired of how much it costs to put on the dog and pony show. Turns out it costs millions of dollars to put the sparkle into an E3 blingfest.

Now in theory, these shows are primarily geared towards connecting businesspeople. To that end, E3 was (again, in theory) only open to industry folks and journalists. In recent years, however, the number of people attending have skyrocketed, in part because E3 registration was a moderately open process. The show was getting huge, and just as with COMDEX, the show-within-a-show was born. What I mean by that is that it was no longer enough to go to the show. To talk to someone who actually knew what they were talking about, you'd need an appointment. To see something really special, really worth writing about, you'd need to meet behind closed doors. To find out anything of interest about something that wasn't on a placard, you needed to get in with the right people. With COMDEX the practice started to get ridiculous; major players officially skipped the show but set up camp in Vegas hotels and had their sideshows for a fraction of the cost.

One source I spoke with told me that media access is indeed a problem, but it probably does not factor in greatly to the decision to downsize the show. Nevertheless, there are plenty of complaints from insiders about how "blogging" in particular has made the shows more difficult, if only because floor people are instructed to speak only of what they are approved to speak of, lest another half-baked headline make the rounds.

Possibly more influential is the fact that E3 is viewed by some people as being the Sony-Microsoft-Nintendo show, which it is not supposed to be. Smaller players have complained about this before, but really, that's just the nature of a tradeshow. Not everyone can be Wil Wheaton, can they?

In all seriousness, the days of the big consumer technology trade shows are indeed passing. At the end of the day, the reason is very simple: ten years ago, you needed a big trade show to generate buzz and hype. It used to be that COMDEX was a special event because so much new stuff was unveiled, and this was the only way to see it. Now, however, information comes down the pipe faster than ever, and companies are wondering if there's really any benefit to spending the big money on displays only to share the floor with other competitors looking to out-wow attendees. It was a media circus for the days when you needed a circus to attract media attention. I don't think anyone would say that consumer electronics is lacking for attention these days.

Official word from the ESA should be out tomorrow. Keep an eye on Opposable Thumbs for additional updates. We'll follow-up there.