At that time, of course, the VHS was just beginning to catch on, and the DVD had not yet been invented. Consequently, budget-conscious film-goers might wait for a film to hit the local dollar house instead of shelling out twice or thrice as much money to see the film first-run.
However, there were problems in the industry. For starters, in the view of many film studios, these theatres were treating films as loss-leaders by charging little for admission in an effort to score profits on high-markup concession items.
As the 21st century dawned, a pair of factors conspired to drive many discount theatres out of business: 1) an oversupply of American movie screens caused by ambitious overbuilding allowed films to stay longer in the first-run theatres, and 2) the delay between theatrical release and VHS or DVD release, known as the video window, continued to shrink. This latter factor convinced many moviegoers that it was simply not worth the money, hassle, and possible encounters with noisy fellow patrons and sticky floors, meaning dollar theatres could be in the twilight of their existence.
Another factor is the growing market for DVD.
Despite these setbacks, however, dollar theatres do prove popular with some demographics. Often, lower-income families will see a movie in a dollar theatre as their prices are often easier to afford. In addition, cash-strapped teenagers, youth-groups, retired people, large families with many children will also go see movies in dollar theatres, where they can be entertained at an inexpensive price. Discount theatres are also a way for busy people that missed seeing a movie at the first theatre release to later catch a favorite movie on the big screen with the family.