Do they cut down on sales?
Minecraft had a demo...
Minecraft is not the average game. Its also one of those odd games that crosses generations. A 5 year old to a 50 year old plays it. There are very few games that do this.
But back to the reason for fewer demo's. Well for starters the world has changed a TON in last 30 years. Games where not the huge industry they are now. Games where sold in a few specialty shops, now you can download, view, see gameplay footage almost anywhere on the net. IN the past you could only guess the gameplay from the screenshots on the back. And while I'm sure there where a few, CONSOLES never had demos, now they do, so in that case, today there are MORE demo's. In the past games where much less accessible, 2-4 new games a month was alot, look at STEAM today, 2-5 games a WEEK! Studies have shown only a very small percent of players play through games, hence demos are actually killing your sales as many do not even finish demo's. And its not because the game it is bad, its lack of focus, new game every day, texting, TV, etc..
Yes, some games are just bad and DEMO would hurt them, but others it would actually kill some sales. WORD OF MOUTH sells games more today then ever. YouTube, videos on game store pages, etc. Right now a DEMO really is what small timers do as they dont have budgets to spread the game all over, pay of magazines to like it, etc.. They do it to gt some word of mouth going.
Less demos, just the way the world changes, no videos, no outlets to let people know of your game in the past is over, Youtube, and the net has made any game available to look at, decide if you like it.