Add in the fact most anyone can have access to a pretty good quality 60" display. It's not as large as the theater, but it's pretty good-sized, has better color reproduction than a lot of older (read: less-maintained) theaters' gear, and you don't have to deal with people using their phones or talking over the movie.
Lastly, let's just consider that for most people the number of movies you'd actually want to watch on a yearly basis has probably decreased in general while the cost of actually producing those movies has skyrocketed-- it's the same problem with AAA gaming. Your costs are so high that if a movie/game isn't an immediate massive hit, you're doomed.
Yeah, the bottom has dropped out of that market entirely. Gaming will be saved by indie and AA games, but I'm not sure if there's anything like that for movies; sure, smaller films exist but distribution, etc. doesn't really have anything like Steam.