If you go to any metro city, the multiplexes offer you great comfort and are also superbly maintained. You positively get to rub shoulders only with the elite crowd in such environs. You will not find guys smoking or breaking any rule, like making the place dirty, which is likely in a single screen theatre.
Now coming back to each question you have raised. Since the advent of information technology has brought in a huge change, the single screen theaters are also closing down. They have all become huge shopping complexes in most cities. The multiplexes offer something different. For example, you can hang out with your girlfriend, do some little shopping and also do a huge amount of window shopping for a full three hours on a lazy Sunday, have lunch within the complex and then happily go on to view a movie in air-conditioned comfort. In summer, this becomes a huge habit for the young IT crowd. This is exactly what will happen to every city.
Now, the profits come from the cities only. There is quite a bit of disposable income and people like to freak out on the weekends. For just around Rs.150 you can enjoy a good multiplex movie in Chennai. These huge shopping malls are simply superb places where you can spend hours. There is so much of chatting going all around. Please do note that there is no rule in the smaller non-AC theaters. The Management charges at least eighty rupees, almost as a right. This is what happens.
The growth of multiplexes will spread to even tier 2 and tier 3 towns such as Coimbatore, Mysore, Vizag, Hubli, Kanpur, Vijayawada, Kurnool, Calicut and so on. This trend will continue to happen. In fact, the entire film industry will depend only on this for profit.
To give you a simple example. The Kamalhassan's movie, named Viswaroopam 2 is just a very average movie. The climax is now literally structured to give a boost to the actor's innings in politics. He is shown as a secular person. However, this has found resonance only among the city crowd and the huge amount of money is coming only from there. It has gone away from smaller towns within just four days.
The crowd in smaller cities does not want anything., The pirated videos are available so freely. An entire family can watch it for less than one hundred rupees. There is so much of cost cutting there.
In Tamil, the movies by say Manirathinam, who is an all India director, have a big urban or city focus and are the stories cater to the IT crowd. The same movies are either made in Hindi, or dubbed and released in Hindi. Sometime ago, there was one such movie on the concept of living together.
This trend will continue. Movies will be made, but the ones that cater to the urban, city or metro city based audiences will win the race. The multiplexes will continue to make in the money, as the "snob" value is so great and this will become even more pronounced in the years to come.