I think the big problem is that Hollywood is populated by vain idiots. They don't realize that most people don't live in LA or NY, or that even most people in LA or NY aren't going to watch their films.
If ya figure an average ticket price of $6, a movie is a huge hit if it does $30 million it's opening weekend. But if there were no repeat viewers, that means that 5 million people watched it in the US and Canada. That means that there are over 300 million who didn't. More than 98% of people aren't watching a hit movie. That is where Hollywood gets in trouble. They figure that since a movie only needs to be watched by 2% of people to be profitable, they do exploitative junk trying to narrowcast.