Or maybe theaters are just on the wrong side of the value proposition. Once you have absorbed the cost of a nice big TV and sound system, the only advantages of theaters are instant gratification for new releases and a screen larger than you can have at home.
The disadvantages, however, are numerous. Cost, inconvenience, 30 minutes of ads, annoyances from other patrons, inability of pausing, inability to adjust sound level, inability to rewind if you missed something, inability to rewatch, ad inifitum... People go to bars to socialize, not quench their thirst. Theaters are not a known for being group socialization hubs and those that do, annoy other patrons. And everything I have read says that alcohol consumption is dropping while iconic British pubs are closing left and right.
I used to enjoy taking the family to drive in theaters for a nice summer event. It was something different and fun. Then the smoker crowd ruined that for me too so I bought a projector and a big screen and now have outside movie nights at home. It's not about the money by itself that's killing theaters (and drive-ins). It's that it's just not worth it anymore.