They are right, this would be a huge boost to revenue if done correctly. Unfortunately they will never do it correctly. First, this is a far cheaper distribution option so why are they charging more than the theater ticket price? Just cut out the theater middle man and keep his cut of the profits. The studios could even collaborate and build their own MPAA non-profit distribution service so studios pay only operating costs and all the profits pass through and then lay off all the obsolete middle men. Offer direct to consumer ultra high quality streams and site direct blu-ray sales from the get go, use an algorithm that accounts for the film budget and gradually lowers price inversely to purchase rate and time and at some point shifts to a bucket that is available for on demand streaming with a fixed monthly fee Netflix style that after expenses simply gets divided out according to proportion of views. All playstation vue style with 5 simultaneous devices.
If existing boxes of this sort are any indication they will lock down playback controls and not allow you to pause or replay the movie. This obsession with reducing the quality of experience for the consumer in order to keep third party services alive is what is hurting. Instead of fully embrace the kind of enhanced experience you could provide as well as the cost reduction of optimized distribution. The better the legal avenues the less it will be worth the hassle and risk of piracy. Forget legal risks, you have to find content, risk fakes, risk bad quality, and pay for equipment to store content. If someone is doing it as a cost saving measure they either couldn't have afforded much content in the first place or couldn't afford the volume of content they consume.