There are some people – quite a few, actually – who assume that conventions like car shows, tech conventions and E3 are primarily a marketing thing which are for boosting sales.
But this isn’t the case…in order of importance, it’s only the third reason why these conventions exist.

So why do they?

The primary reason these conventions exist is to boost the egos of the companies that spend money on showing off their stuff. This also overlaps with gaining prestige among their competitors.

They don’t actually care about boosting their sales, only that they show off how awesome their company is and that it’s worth respect. After all, only a company that has millions or billions in earnings can afford to spend millions of dollars on some floor space, right?

The other major reason that these conventions exist is to entertain attendees and the customers of all those corporations.
People didn’t look forward to E3 to hear all the latest announcements (you could read about them in magazines like the next day anyway, or hear from your friends), but because the convention itself was exciting. All those booths, showing off all the latest games and hardware, and all the hot girls promoting all of that (sometimes thru cosplay).^A) It’s fun!
This is also why taking away that fun factor makes these conventions less appealing to go to. And I’d bet this is the main reason E3 has declined.

I can also speak personally on this point, since I actually went to a motor show and, well, I didn’t buy anything. Not just because I couldn’t afford it, but because I didn’t go there with the intent of buying: I went there to look around at cars, motorbikes and hot girls.

Now we actually get to the sales part. It would be foolish to say that companies don’t get anything out of it, because you can meet with industry insiders and customers directly in one place. So there’s a networking advantage here. If you’re a new company just starting up, that is actually quite valuable. Though it isn’t as important if you’re a very big company.

Though, again, this isn’t the main reason these conventions exist. So it’s more of a fun bonus.

However, I do think that these conventions originally started for purely practical reasons…specifically networking, rather than marketing. Conventions are a way to guarantee that important people in the industry are all going to be in the same general area and will all have time to discuss business or whatever.