After the big announcement yesterday that E3 was undergoing major changes (or not coming back at all), a day of argument over whether Next Generation had been overzealous in calling the event "cancelled" began. Surprisingly, Next Gen even shot back over this, saying:

Some gullible journalists, evidently blinded by a desire to do-down a rival scoop, have taken this as evidence that E3 is alive and well and merely being 'downsized'. But this euphemism doesn't change the facts. The decision by big manufacturers and publishers to walk away has left ESA in damage-control mode. As we reported yesterday, E3, in its present form, is dead.

Ouch. All the same, everyone was waiting for the Entertainment Software Association to finally step in and speak officially on what was happening to the much loved, much loathed yearly trade show. And now, they have.

"It is no longer necessary or efficient to have a single industry 'mega-show,'" said ESA president Doug Lowenstein in a statement. "By refocusing on a highly-targeted event, we think we can do a better job serving our members and the industry as a whole, and our members are energized about creating this new E3."

Prefacing its statements with the caveat "as currently envisioned," the ESA said E3 2007 will still be held in Los Angeles, but won't have the "large trade show environment" of previous years. The city has previously estimated that the show brings in about $20 million in direct spending by the 60,000-plus attendees and exhibitors.

According to the article, Sony, Microsoft, EA and THQ were among the publishers pushing hardest for a change in format. It should be no surprise those also happen to be some of the biggest spenders at the event. The ESA says they're currently working on exactly how the show's new form will take shape, but as mentioned yesterday, most signs point to a smaller, more intimate event involving a few hundred people versus thousands. This most likely means, among other things, no more getting a pass to attend just because you work the counter at Gamestop or run a two-bit blog (gasp!).

So while Next Gen may have used some sensational writing in their story, I don't think they were wrong. E3, as it's pictured in every gamer's mind, is dead. It won't be an amusement park of noise and lights and giant screens and booth babes and companies trying to outdo each other anymore. An event called E3 will carry on, but it won't be the same animal at all. Of course, it's possible -- nay, likely -- that companies will still try to outdo each other, just on a smaller scale, which will escalate each year until in 2015, we're back where we started. But let's not get ahead of ourselves.

Interestingly, one of the parties least happy about this is the city of Los Angeles, which took in a huge amount of money each year thanks to the expo.

GameSpot has also learned that senior ESA staff met with officials from to the City of Los Angeles this morning to discuss the impact of having a scaled-down event will have on the metropolis. Attorney Daniel Offner of Offner and Anderson, PC, a law firm that represents numerous E3 exhibitors past and present, thinks the city might take legal action. "I'd be surprised if the city took this lying down," Offner told GameSpot. "I'm sure the city will take a close look at their rights and try and protect them."

I have no idea what kind of legal action they would take. "It's illegal to stop spending your money here"?

Update: Weighing in on yet another factor I hadn't considered, an industry source speaking to Game Politics questions how this will affect the ESA itself. After all, the organization made a fair bit of bank each year off E3, and with the ESA involved in regular court battles, how will they continue to pay their legal fees?