As the interminable stream of kitten free videos demonstrates, entertainment does not need to be expensive.

I like me some kittens as much as the next guy, but it's a different sort of product. When I want to watch a movie, 2 hours of kittens aren't a good substitute, the same way that I sometimes prefer to curl up with a good book rather than spend more time reading comments on HN or tweets on Twitter.

It's not that you should be sympathetic to those media with higher costs, as that such art forms couldn't come to be absent some system of copyright in the first place, and the fact of consistent demand over the last century shows that those kinds of entertainment have huge economic utility for consumers. Again, I'm not arguing for the Disney perpetual copyright approach here, but especially in this era of virtually cost- and effort-free digital copying, you can't realistically plan to recoup your production investment without some sort of way to assert authorship.

film a relatively minimalist production of "Hamlet" for less than the cost of a new economy car (assuming your small cast and crew work for shares of revenue)

You can, indeed. But this is itself a problem: actors and crew need to work to gain experience and exposure, but more and more often they're asked to work for free. It's very very hard to get those shares of revenue to turn into anything resembling cash, especially if you don't have a budget for marketing, and so people, especially crew, are constantly being asked to work long days without even getting paid minimum wage, because returns are so uncertain. Without some sort of reasonably robust copyright system, the incentives to do that get even worse.

I think critically successful movies like "Primer" and "El Mariachi" demonstrate that rather well.

Not as well as you imagine; bear in mind that the tiny #s you hear about associated with films like this are part of the marketing in just the same way as big budgets on blockbuster movies. Primer is a very good idea in a pretty bad film - a fair bit of its apparent complexity comes from obscurity, eg the scenes at the party later in the film are hard to figure out because you can't see what's going on on the screen very well. I like reading the script more than watching it. And I think it's kind of significant that despite the success of Primer Carruth has only made one other film, Upstream Color, which most people outside the experimental film community find incoherent at best.

El Mariachi got nearly $1m of additional post-production work (paid for by the distributor) to fix the soundtrack - originally the scenes were recorded without sound and Rodriguez had the actors repeat their lines into a tape recorder afterwards - and to do a proper film transfer, vs the videotaped version shown at Sundance. But nobody outside of the filmmaker community talks about that (although it's no secret, Rodriguez detailed it at length in a book he wrote and is great about sharing his knowledge in general). Plus, even the figure for production costs are a bit deceptive; Rodriguez got loaned a lot of equipment for free, and shot in a town in Mexico where he was able to borrow guns from the local police through a personal connection, among various other freebies.