I don't know if it's the death of cinema. I think the death of cinema is the increasing prices of tickets, increasing quality of electronics at home and ease of access to films through the net. That said, blockbusters were still busting blocks last I checked.
I'll say this though - digital does not hold a candle to analog in terms of quality. 35mm film is vastly superior. 70mm blows digital projection out of the fucking water. This is part of the reason I'm indifferent to watching a movie up close on my 29" monitor as opposed to watching from the middle row of a "modern" movie theater. The quality of the picture has dropped pretty sharply to what it used to be. In a lot of cases it's just like a regular DVD blown up to stupid proportions, a blurry mess (and blurry audio too).
Projectionists used to be skilled at what they did. They had to be just to do their jobs, and their care showed. Now they just hire some kid out of high school and he slaps a disc in the drive and fucks off for 2 hours while the picture is all scaled wrong and the audio sounds like it's coming from the theater next door - and they want $15 a ticket. I'll watch it at home. God damn I sound like a grumpy old bastard. But it's true... I'm not angry about it, I'm just left asking "why should I bother to go?". What reason is there if I can't at very least get a better picture?
3D? Hah.