I don't completely agree with this part. I do think the number of theaters will decrease but I don't think they will become simply novelty items (in the way that drive in theaters are).
There are several selling points to theaters only one of which is "new releases". The other primary selling point is the experience, which breaks down into two sub points.
One is "you can't get this at home". This covers things like IMAX, even a 50" 3D TV doesn't even come close and with any foreseeable technology it just isn't going to happen in the home outside those few who build $x0,000 setups with a dedicated room.
The other part of the experience is the social aspect, which covers the growing trend for theaters to be less the "500 seats" style and more the tables serving beer and real food style.
So I think theaters will continue to be popular. The ratty "cram 500 people into a room for a new release" variety will die out. IMAX style theaters and those that provide a more "dinner and movie with friends around a table" style will grow.
I think if you look at the industry statistics, this is already happening. I know at least around here (Northeast USA) numerous old style theaters have either closed or converted to the "dinner and movie" style and IMAX theaters seems to be popping up everywhere.
Another angle is the advertisers' participation. Fox doesn't put some of their shows on Hulu not because it's hard, but because they won't make the same $ per impression that they make on TV.
There's work to be done to convince the advertisers (ad agencies?) that placements on digital screens are just as valuable (hopefully more valuable) as TV. Remember that Movie studios are also TV studios, and you can't fight one without the other.
- Director, actors, writers and crew. The creative team behind the movie.
- The producer: the business side.
- The movie studio: the financial, marketing and distribution side.
When YC asks for startups to think of ways to "Kill Hollywood", they are talking about the last category. So far I have not seen a single comment talking about cutting out directors or producers. The problem is the movie studios, and their Walmart-like hold on the industry.
Now that that's established, what can we do about this? How to we break up the relationships between the creative team and the movie studios? I see several ways:
1. We need a simple and cheap distribution channel. In 20 years there will be no movie theaters. They might remain as a novelty, but 90% of them will be gone. They are already not making much money and as home theater setups get better, there is no way that people will want to go to a theater and overpay for the soda and popcorn. Platforms like Roku and iTunes or "networks" like Hulu and Netflix are the future. Allowing people to publish directly to these channels and making it transparent how much return there is "per view" is key here.
2. We need independent marketing for movies. A director who, for the sake of the argument, self-financed a movie needs a way to market it. This is analogous to a web app developer marketing her app via Google AdWords. Once again content platforms like Roku and iTunes can help greatly here since they already have access to lots of people and are common places to seek movie trailers, etc.
3. We need a new source of finance. The problem is that a successful blockbuster movie takes many millions of dollars and someone has to front the money before any return is made. This problem has some technical solutions. For one, we could create a web app that matches the creative team with potential investors. The investors get to read the script, watch the castings, even interact with the team if they for example are looking to invest >$10k, etc. Then if the movie meets its budget (the interface would be similar to Donors Choose), production starts. Investors wait, watch and pray, potentially even trading their investments in these movies (this is risk sharing after all). Once the movie is made it goes into marketing and distribution and the returns come in, where they get split up between the investors.
The above are not business plans, just a quick brainstorm of different approaches to disrupting or evolving the industry. I have no experience making movies beyond taking videos with my phone so this is a bunch of hogwash with 99.5% probability.