There are several different reasons I believe movie attendance is down. Seven years ago when I was in seventh grade, there was no such thing as Netflix, Redbox, Hulu, or even 60 inch plasma HD t.v.'s. Yes, there were such things as 60 inch televisions, but they weren't so crystal clear that you could literally see a blemish on a reporter's face. Increasing technology is giving a crucial beating to the movie theater business.
The first big technological advance that is hurting the movie theater revenue the most is the recent development of streaming of movies through Netflix, Hulu, etc. For Netflix, you pay a small fee of, I believe, eight dollars a month. Crap, one movie ticket at a theater costs eight dollars. Why pay eight dollars (not including the five dollar drink and six dollar popcorn) for a ticket to see a movie when you can watch unlimited movies on Netflix for the same price? Every movie will have its loyal followers that will spend this kind of money to see a midnight premiere, but it does not make sense to go out and pay this kind of money if you are not completely infatuated with what is playing.
One might say "Netflix does not come out with the latest, greatest movies that just aired in theaters." This is where Redbox comes into play. Unlike Netflix, Redbox displays most of the latest, greatest movies that just left theaters, and most importantly, for the slim price of $1.20! They do not come out right away, but if you wait, you will save money. The Sunday Morning piece gave a perfect example of this. Jeremy Remudo, instead of paying eight dollars to see a movie in theaters, waits until the movie comes out on Redbox and saves himself about seven bucks. That's a meal at Whataburger.
This leads us the the second major technological advance that is devastating to the movie theater attendance/revenue. The television industry is booming. Not only are the TV's getting bigger, they are getting smarter, louder, and more crystal clear than ever. If movie fanatics pay eight bucks to see a movie in theaters, chances are they have a flat-screen TV now days. I was watching an advertisement the other day about Sharp. They just released the biggest LED TV in the solar system at 90 inches (you can watch the video here). Why would anyone want to pay to see a movie when you can watch it on a jumbo-tron in the comfort of your own home? Granted, most people do not have the money to go out and buy a 90 inch TV, but this is another advance that is hurting the movie theater industry.
As you know, most movie theater's are not theater's if they do not have middle school and high school aged kids in them. I guess you could say this is part technological advance that hurts attendance, but it is mainly a distraction problem. With the increasing amounts of smartphone/iPhone users, there are many more things to do while sitting through a movie than simply "text." Middle schoolers and high schoolers are in the "cool" stage where they do not care about the older folks who are actually trying to watch the movie. They will sit through the whole movie giggling and gaga-ing about Sam's latest Facebook or Twitter post, oblivious to the people behind them. There is a recent article that goes along with this.
These are some examples of things hurting the movie theater industry. I will try to come up with a few solutions that could possibly work. I do not know how easy it is to just "drop" prices because it probably does not work that way, but I'm sure they would gain more attendance and revenue if they would offer specials for certain types of age groups during certain types of the week. For example, have a "college night" where tickets are half-off, or a "high school night" where tickets are half-off as well. Just something along those lines. Believe it or not, Sherman, Texas used to have a Dollar Movie Theater. It was similar to Redbox in that they would release movies a few weeks later than regular theaters, but only charge one dollar to see the movie. Granted, food and drinks were still higher than a tree. Notice I said Sherman "used" to have one. It has since closed down. I figure if a company can figure out a better way to run something like this, it could have the potential to be very successful. Lastly, I think movie theater's should more strictly enforce the "texting" and "high school drama" that goes on in theaters. All of these could have the potential to gain more attendance/revenue for the movie theater industry.