Yup. I was surprised, too. When I began hearing the news that theater-ticket sales were down, I didn't think much of it because, like many here, I just assumed people were transfering their spending from the movie theaters to DVD and PPV. However, we're being proved wrong.
Actually, this is one instance where I don't mind being wrong. Instead, it's a pleasant surprise. :-)
I suspect it has to do with the quality of what's being offered. Few movies I want to see, fewer still I want to own.
When the money people wake up and realize what side their bread is buttered on, maybe they'll change...or lose out to someone who steps up to fill in the vacuum.