Well, at least in my city, theaters are dwindling. In the city limits there are currently two movie theaters: one is small "art house" type theater, the other offers "second run" films. Ten years age there were three or four times the number of available screens in this town showing movies.
Many of the smaller independant theaters that are still left at this point are struggling to keep up. The second run theater I mentioned above just recently, and barely, managed to raise the money needed to convert to digital equipment so they can remain in business past this year (or is it next year that it all changes over?).
Personally, I am motivated less and less to schep all the way to a crowded theater full of noisy a-holes to see a film. I can just wait a couple months and see it in the comfort of my own home and watch it at a time of my choosing.