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Cinema is going 3D (consoles did that 2 generations ago!!).  Many big names are behind the technology and as all theatres worldwide will eventually support digital projection, they will display films in 3d.

Cinema has been loosing out to DVD, VHS and TV since the 50s (when TV was introduced).  Back then cinema was far more popular than what is is today, TV took away millions from the studious so they were forced to respond with Colour, Widescreen, Stereo sound and Surround sound. TV and home cinema slowly caught up so now cinema has to push ahead again.

Grindhouse was an attempt to bring back the 70s B-Movie experience but it bombed in America which saw its worldwide release ruined.  Film was split into two and released seperatly. (UK had Death Proof but Planet Terror has gone straight to DVD!) (BBFC has just classified 192min version so hopefully it will get a limited release)

Grindhouse made for $53,000,000 and did $50,187,789 (worldwide)

Superbad
was made for $17,500,000 and did $167,463,226 (worldwide)

Spider-Man 3
made for $258,000,000 and did $891,930,303 (worldwide)

PotC: Dead Mans Chest
$150,000,000 and did $1,065,659,812 (worldwide)

Yes movie budgets are on the increase, tons of money is spent on marketing but it usually pays off just look at the numbers!  Producers/studios do not like taking a risk (if it aint broke dont fix it!) so sequals and huge promotions are not going anywhere just yet.

Games industry is not in trouble like cinema as it is still seeing huge growth but this generation is different from previous.