Video may have killed the radio star, but the movies haven't killed the theatre. In my city there are no more movies; after the local enterprise went bankrupt, one entrepreneur tried to keep one theatre open for a few years, but he eventually gave up and closed it. There are a few multiplexes in larger cities, but if you live in anything below 100 thousand people, chances are you have no place to see a movie on a large screen, unless you buy one.
OTOH, the theatres are alive and kicking. Some of them are in the business for a hundred years already, some almost two hundred, and although they are somewhat financed by cities, they have an audience. Specially the kids' shows.
To differ from the american style theatre, where a troupe is assembled for the season, then runs all its shows in a few weeks and then closes the shop for the rest of the year, these run their shows year round, starting some time in september and ending in june. June is also the month when most of the theater festivals are, and you get the chance to watch shows from other cities, if it happens to be in your city this year. The theatres also visit each other at times.
They have modernized somewhat, but not much - better lights, sound effects, even microphones so their voices carry exactly as much as they should. They still rather rely more on their own inventiveness and imagination than on electronics.