I blame the hollowing out of the middle on distribution. Denzel Washington and Leonardo DiCaprio are fine actors, but you don't need an actor of their caliber or pay to make a decent movie. There's plenty of "just below top-flight" talent in acting, writing, and directing (and arguably some of it is better than the "top-flight" stuff), more than enough to make some perfectly serviceable and entertaining movies/TV.
Hollywood movies in theaters can sell loads of tickets, and smaller movies can subsist off of rabid fans, but there's not really a mid-line distribution path where I can (a) reach out to a few million people and (b) get them to pay some amount between $5 and $15. Yeah, there's Netflix, but Netflix+DVD sales isn't much money, and Netflix doesn't promote, so it's hard for people to stumble across your movie.
Someone below suggested that video games have the same problem, and I'd argue that's distribution-related as well. On the high end, there are commercials and promotions and E3 demos for games like CoD or WoW, and on the low end, most of the guys making money depend on getting promoted through "featured game of the day" deals or "top rated" sections in their app stores or viral marketing or by just being so cheap it's an impulse buy. There's no real mechanism for a $15-$30 game to receive enough exposure that large groups of people will choose to buy it. Promotions and deals on Steam help with that, but it's not a big channel.
"Denzel Washington and Leonardo DiCaprio are fine actors, but you don't need an actor of their caliber or pay to make a decent movie."
Paying millions for DiCaprio isn't necessarily because of acting talent at this point. It's because of name recognition. If you think that $X in actor salary will get you $5X in box office net, you'll pay it.
From the moviegoer's standpoint, if you have seen movies with DiCaprio that you liked, you'll be more likely to see another movie with DiCaprio. Ergo, the "big name" strategy pays and continues to be used.
Hollywood movies in theaters can sell loads of tickets, and smaller movies can subsist off of rabid fans, but there's not really a mid-line distribution path where I can (a) reach out to a few million people and (b) get them to pay some amount between $5 and $15. Yeah, there's Netflix, but Netflix+DVD sales isn't much money, and Netflix doesn't promote, so it's hard for people to stumble across your movie.
Someone below suggested that video games have the same problem, and I'd argue that's distribution-related as well. On the high end, there are commercials and promotions and E3 demos for games like CoD or WoW, and on the low end, most of the guys making money depend on getting promoted through "featured game of the day" deals or "top rated" sections in their app stores or viral marketing or by just being so cheap it's an impulse buy. There's no real mechanism for a $15-$30 game to receive enough exposure that large groups of people will choose to buy it. Promotions and deals on Steam help with that, but it's not a big channel.