I agree that movies are losing their primacy, but I have a hard time believing the public is controlling their downfall.
I believe it has more to do with massive amounts of consumer choice. You could call this public control, but the stuff that sticks and makes money tends to come from corporations - take video games for instance, it's a multi-billion dollar industry that's taken a huge bite out of Hollywood profits.
And even though people are turning to YouTube for a fix at work, I think as time goes on people will see it for what it is: America's Funniest Home Videos on crack.
In the end, Hollywood will still serve up movies it sees fit and the public will still watch, I just think theatres will die and a new form of distribution will rise up to take their place. Entertainment companies will still profit and hype machine will live on.