Some other talking points ...
These are just some talking points, on the risk/reward curve, so bear with me:
Pros, Home theater (for you, the consumer)
-- You pay one cost to sit in your living room, say, $5.95 and watch a feature film.
-- You can watch that feature film on a 16 x 9 flat screen or a 27-inch TV
-- You can pop your own popcorn, buy your own candy, and get your own drinks
-- You can dim the lights as low as you like
-- You can pay a babysitter, but don't have to.
-- You can do this alone or with friends
-- No futzing for parking spaces or getting out of the parking lot
-- No constant barrage of adverts coming
-- You can talk as much as you like
-- With the right equipment, you can pause and rewind
Pros, home theater (for distributors/filmmakers)
-- No shipping films to theater; piped directly from Hollywood (or wherever)
-- Less hassle negotiating with cable/Sat holders vice theater owners
Cons, home theater (for you, the consumer)
-- Large screen experience lost
-- No social component (i.e., the movie experience with others)
-- Slims date night choices
-- Eventually, movies become "pay-per-view" events and you get charged boxing ticket prices (e.g., $49.95, or 20 Canadian at the current rate

)
Cons, home theater (for theaters/moviemakers)
-- Revenues lost, movie making costs stay the same (or grow)
-- Diminishes Hollywood's "movie making magic" persona. Embellished, there are few people whose movies make it on to the "big screen" but thousands, if not millions, get seen on smaller screens. That puts the likes of Speilberg, Ridley Scott and others on the same level as those with access to a 24p camera and Adobe Premiere.
-- Star power lost; celebrity commodity devalued
Miscellaneous
-- You can't make theater screens any bigger. Imax does no more or less business and is a novelty
-- Three-dimensional films are also kitsch. This is a also a filmmaking process rather than a destination. If you want to throw in a future technology, like, say, holographic filmmaking, then that, too, gets lumped here.
-- Video games out earned Hollywood films in 2007. Another stay-at-home entertainment opportunity. Plus, the experience last longer and is interactive.
TV didn't kill movies because TV became a separate medium; not just a box to show Hollywood films in. However, TV is trending toward lower-cost TV shows, and more reality TV. The separate home theater is affordable and the experience, with the right components, is comparable.