Theater did not die, as was often predicted, as movies grew into an art form. But because of the challenges facing them, theater companies have become more clever in their outreach and marketing strategies.
Mass-produced electronic media - from big-budget movies to rock videos - are cheaper for the consumer. Meanwhile, resident companies are expensive, labor-intensive concerns. Ticket prices are necessarily high, though theater companies make every effort to offer discounts, free tickets, and other bargains to students, seniors, and special-interest as well as underserved populations.
But on the other hand, theaters generate jobs, from the art staff to the tech crews to the parking attendants and the servers at local restaurants. And they stimulate downtown businesses and help attract tourists.
Electronic media can be reproduced and shown all over the country at once. But a theater company performs to a single audience at a time and may employ:
technicians for all the designers
musicians (even composers sometimes)
playwrights (or pay royalties)
a host of other support staff and technicians for really big shows
On top of the cost of personnel is the cost of materials - everything from light bulbs and flowerpots to fabric, wood, glass, and steel.