I'm sure the quick turn around to DVD doesn't help, but for my money the big reason why cinema attendances are falling is that there are so few good movies being produced.
The last halfway decent action film I can think of was Bad Boys II, which wasn't particularly great. (Watch the two one after another, and the sequel really suffers.) The last one that was actually good was, what, the Rock? That's going back 9 years.
Produce good enough films, and people will go to the cinema. Don't produce them, and they won't.
(Why are action films key? Special effects. The bigger the effects, the more the film gains from the big screen. A romantic comedy works just as well on the small screen. Likewise most other types of film.)