If the trends in ticket sales continue, it seems like theaters by and large could be a thing of the past. It really is not about whether a large group see it as still relevant, its can the theater business maintain a profitable industry if it loses x% of its patrons.
If ticket sales decline, profits shrink or losses grow. Changing the model another way might increase revenues for theaters (say a all-you-care-to-watch pass, which would likely increase food sales), but only if Holywood changes its revenue model as well. If they continue to charge theaters the same rates, that model likely wouldn't work well. Further, if Holywood had to lose revenue, would it be more interested to work with other streaming services first, or create a competing service, versus go to the theaters?
To me the MoviePass subscription company is almost a Trojan Horse. While they continue to burn and lose money, and grow subscribers, they are making their subscribers see their experience as the new norm. If they go out of business, these subscribers now have to chose if they want to pay for each pass again individually (very expensive in comparison). Likewise, if theaters and Hollywood make a deal, it cuts their own revenue significantly. Its almost a lose/lose situation.
All this is just some of whats hurting Hollywood and the theaters. You also have personal politics growing sharper, a Millennial generation that doesn't value these experiences as highly, a fundamental change in how reviews are looked at, no longer being as easily controlled (RottenTomatoes), 3D movies not holding peoples interest, etc..
Its a bumpy road that doesn't seem to be getting much smoother.
4k streaming will be more of a norm, and that will likely be enough for most users.