Ronald Reagan answered the OP’s question of why most movies are lousy these days in his autobiography, An American Life (p. 116-118). He explained:
Of the fifty-three pictures I appeared in, thirty-one were made before the war and twenty-two after… But enormous change was coming to Hollywood after the war, and a lot of it wasn’t for the good.
When I arrived there in my Nash convertible in 1937, there were seven major studios in Hollywood. Each had a huge production lot dominated by barn-like soundstages where the interior scenes of movies were shot, a make-believe New York City neighborhood, and a western town with false-fronted saloons and a dusty main street for exterior shots. The studios also owned large ranches in the San Fernando Valley where western and outdoor movies were filmed.
In those days Hollywood was run a lot like an old-fashioned candy store: You cooked it in the back and sold it in the front. Each studio had a big stable of contract actors, writers, directors, musicians, and producers who turned out the pictures, and a nationwide chain of theaters where the pictures were exhibited. The studio was like an assembly line that was entrusted to keep a steady stream of pictures flowing to the theaters.
This system turned out many of the best pictures ever made. Each studio was like a big family. You belonged to Warner Brothers or MGM or Paramount and your associates and friends were mostly other performers and writers and directors from your studio. Sometimes we had family fights, but the system gave a solid stability to the picture business. You belonged someplace.
But that all changed after the war. An anti-trust suit was brought by a private chain of theaters and as a result the Justice Department issued a series of decrees declaring that the studios could either make pictures or operate theaters - they couldn’t do both.
This turned Hollywood inside out overnight. The studios chose to continue producing movies. But no longer could they afford stables of actors and other workers under contract because from now on, they had to make movies purely on the speculation theaters would want to show them.
Because of tax problems, many stars were willing to give up the security of a studio contract and a weekly salary. I was one of them. I was in the ninety-four percent bracket, which meant the government took most of what I earned. I’d always thought there was something inherently unfair toward actors in the tax system. I’d seen careers take off like a comet, shine brightly, then burn out almost overnight, but during their brief period of stardom, taxes would have eaten up most of their income and they’d have little left afterward.
Nevertheless, I believe the government’s decision to break up the studio system was wrong. It destroyed the stability of the industry under the justification that the studios monopolized the picture business. But they didn’t have a monopoly; there was intense competition that worked well for everybody. You had seven companies who were always competing with each other to turn out a better movie than the guy down the street, and if people didn’t like a picture, they’d show it by voting with their feet.
Owning the theaters provided a guarantee to the studios that if they guessed wrong on a movie and made it, at least they’d get some of their money back by playing it at their own theaters. This allowed them to take risks on people and stories.
It allowed the public to create real stars - legendary stars with staying power like Clark Gable, Olivia de Havilland, Gary Cooper, Jimmy Stewart, and a lot more.
A star like Judy Garland or Mickey Rooney wasn’t born a great star. When a studio spotted people they thought had talent and promise - for instance, a pretty girl in a college play - they’d sign them up for a small salary and send them to classes where they were taught to act and sing and dance. Then they tried to nurture them, bring them up.
The studios knew they didn’t make stars, the public did. But they could tailor movies to showcase an actor’s particular talents, allow their talents to develop, and give them the backing of wonderful character actors and actresses who would never become stars. In those days, the great stars were built up over time and their names and faces became as familiar to people as their next of kin. The studio publicity machine saw to that. Every performer had a publicity agent whose responsibility it was to see that you were in the trade papers, the gossip columns, and the movie magazines: It built an image of you. That’s what sold tickets.
I think AT offers a interesting argument wrt why the quality of tv programming has improved over time. i don’t think his argument is as strong on movies. specifically, he says they have become more reliant on reaching large audiences but doesn’t say why.