The point of this article is that, even on full sized televisions, YouTube is kicking Hollywood's collective ass. When they look at hours of programming watched on full sized televisions YouTube is clearly on top, followed by Netflix, with everyone else quite a ways behind. That's not counting computer or smaller screens where YouTube is completely dominant. Movies are making less money these days because far less people are spending money on movies. Interestingly enough one of the few bright spots for movies are smaller studios making limited availability movies. These movies have much lower budgets, and basically non-existent marketing, but the empty seats in the movie theaters means that there are screens available at a price where they can make a tidy profit.
Traditional television is getting absolutely wrecked. The only part of television that people are willing to pay money for is sports broadcasting. No one has a cable or satellite subscription unless they are a rabid sports fan. The shows that everyone is talking about are as likely to come from Korea or Australia as they are from Hollywood. For years people assumed that Hollywood drove the value of cable television, and now that people have choice it turns out that the valuable part of television is the sports (and to a less extent the news). ESPN costs more than Netflix, Paramount and Apple TV combined, and Disney forces you to purchase to purchase a whole pile of their regular programming to get it. Disney is currently suing SlingTV because SlingTV is selling day and weekend passes so that you can just purchase the games you want to see without all of the rest of the slop that you don't. On top of that Hollywood is seeing increased competition from the entire rest of the world. The hit television show that everyone is talking about is almost as likely to come out of Korea as it is from U.S.
Hollywood is definitely contracting, but it is mostly because making scripted content, whether it is for television or movies, is becoming far less lucrative than it has been in the past. People are watching less scripted content, and when they do watch something it is likely that what they are watching is not from Hollywood.
As you have mentioned Prime Time TV has devolved into cop shows, but it's actually worse than that. The few hits that Hollywood have had over the last few years have invariably been live competitions and other reality TV shows.