Ed Driscoll has some great thoughts on the movie business at tcsdaily.
IMO it's not just the movie theaters that are hurting. The girlfriend and I recently visited Blockbuster. As we walked through the aisles, looking for something to rent, we found ourselves increasingly uncomfortable at all the sleaze, violence, and generally tasteless titles on display. Left me wondering if this stuff was really profitable. If so, then what the heck are you people out there watching?!
Meanwhile we recently watched Galaxy Quest. We saw it together in the theater when it first came out and laughed so hard it hurt. Laughed equally hard when we saw it on DVD. I've always been a mild Trekkie (watched TNG faithfully in college but have never attended a con or donned a uniform, tyvm), but she's not much of a SF fan at all. Didn't matter. When Laredo takes the ship out of dock for the first time, she couldn't breathe she was laughing so hard. The imagery in that scene is truly genius.
Why can't we have more movies like that? I'm not asking for more pop-culture parody movies. While clearly a parody ("At least he's outside."), GQ was so much more funny than that. Why is it that David Howard (who wrote GQ) hasn't written any other movies? If he's a one-hit wonder (very possible), why is it that Hollywood hasn't found a few dozen more one-hit wonders like him?
I think if you can answer that question, you'll know why Hollywood generally sucks at making movies.