Sigh, the stupid, it hurts. Gotta make everything about stupid culture wars. Clearly expanding your audience kills it!
E3 was a press event. Originally it was the best way to get press attention to new products. It thrived when it was a press only event and it was the can't miss event of the year.
Then the internet got bigger. It became easy for anyone to stream events. We got social media to distribute news and build hype. The press didn't need E3. E3 tried to survive by opening up to everyone, but it just diluted the value of the event for the companies demonstrating products. It was a cost effective approach when you were demoing to the press, who would then magnify your message many times over. It wasn't cost effective when you were targeting the customers directly.
E3 was dying before COVID hit. There had already been multiple times it almost got cancelled. The console makers and the big game publishers were no longer consistently showing. Many of them had success with their own dedicated streaming events, and were favoring those. They cost way less to do, you get more control over the event, and it's more effective. COVID greatly sped up the demise of E3 and forced everyone else into online events. Now no one wants to spend a fortune for an in person event.