I predicted this the very day that E3 announced its death spiral.
E3 was broken, but then again, E3 arose at a time when the market was vastly different.  It didn't change with the times.
The main premise behind E3 was as a networking zone, a place to reach retailer and distributors and make a pitch for a title - but above all - it was a place to reach the print and television media.
You remember that? Print media?  Time was when PC magazines and video and computer game magazines were hard to reach and getting them all at arm's length to sell your hype was the essence of the business of marketing games.
Well it isn't anymore. While print media still matters, it is nowhere near as important as it used to be  - the web media has overtaken  the field.  Web media is a lot easier to  reach now and the days of a print media controlled by Ziff- and a few others to reach your customer base are long gone.
So why all this hooplah for a media only gig with ridiculously priced booths?  Worse, why does EA and Sony spend this dough only to - in the end - promote other publishers or  - in Sony's case, Nintendo?
They don't want to do that anymore.  E3 booths were insanely expensive.  
Distributors can be reached by a centralized industry without difficulty. Retailers are relatively easy to access as well.  True, networking among developers and publishers is always important - but GDC does a much, much better job of that than E3 ever did.
If E3 is as much about reaching web media, and if word of mouth and blogging creates better far better-buzz-for-the-buck, you are much better off going straight to gamers at Comic-con and Gencon.  The payoff is better - a lot better - than an E3 booth. If high profile television media is your thing, there is always CES.
Moreover, if you are big - run your own events.  The junkets will attract the more traditional media just as they always have. 
The idea of not being able to do the business of E3 with fanbois about was the problem not of E3 - but of the mindset brought to it. If you want to talk to insiders, do it at GDC or over the phone.  If you want to show off your wares, show them off to the people who buy them. Because the monolithic media as a means to reach them is now dead.
Adkinson saw the opportunity immediately. Gencon has been going in that direction already - and now it is certain to be there.  Last year, there was serious concern there might not be a GenCon SoCal again. Now? They are moving in to the same convention centre E3 had to leave.
You may like it - you may not like it. I think the two portions of the show can co-exist quite happily with one another - at LA and in Indy as well.  
But like it or not - it's a done deal. It's going to happen.
For those thinking that GenCon is about RPGs - I'm guessing you weren't there last weekend. The events are about RPGs - but the dealer room has relegated RPGs to become the poor cousin of the show.  Gencon last wekeend was about miniatures and board games and CCGs - new RPG book products were few and the buzz at the show for all but a very few products was low.  For the most part, dealer booths for RPGs were sad affairs at the last Gencon.
If you wanted hype - it was showing off WoW Burning Crusade  or the forthcoming WoW CCG.  It wasn't about Ptolus folks - it just wasn't.