You know what they should do? They should make movies and send them directly to television for people to watch for free. But since people are watching for free, they can institute breaks in those movies called "commercials" where they sell advertising space.
Of course, these "commercials" could never generate as much revenue as ticket sales generate so actually what they should do is have some movies for free and some you have to pay for. And since ticket sales generate more revenue than commercials, the production quality of those paid-movies would be better than the free-movies.
Then people could choose what they want. Stay home and watch something mediocre for free, or pay $12 to watch something with superior production quality, acting, effects, etc. To further enhance the experience, these "paid" movies could be shown in public auditoriums with superior quality audios and visuals.
The only problem with that setup is you run the risk of people whining that they want to be able to watch the superior production movie for free since other forms of entertainment are free. Nah, that could never happen. No one is forced to do anything they don't want to do so no one would be silly enough to whine about such a thing.