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I have no idea why demo's fell out of favour this days. Back in the day pretty much every pc game had a demo, and a good deal of console games had one as well.
Now it's a rare thing, and mostly on the indie side.
To be honest they are making a comeback, at least in games with lower marketing budgets, probably to avoid the huge devolution numbers before 2 hours too.
But yeah, I miss when almost every game had demos. I remember buying PC gamer just to get those CDs with dozens of them, including the first time I saw and played C&C: Red Alert and was flabergasted. Good times.
They mostly fell out of favor once hype based marketing became the way to sell games, since a company could just focus on the day one patch instead of building a stable demo version that allowed players to see how good or bad the game was.
In short, it's easier to win customers by playing on their hopes and imaginations, then it is to win them over by allowing them to try a game to see if they like it before buying.