In this interview with The Wall Street Journal, producer Roger Corman discusses the decline of the B-movie:
So what changed?
Drive-ins faded away and the cost of distribution got bigger. And then “Jaws.” Vincent Canby wrote in the New York Times: “What is ‘Jaws’ but a big-budget Roger Corman film?” What he didn’t say was it was not only bigger but better. I’m perfectly willing to admit that. When I saw “jaws,” I thought, I’ve made this picture. First picture I ever made was “Monster From the Ocean Floor.” This is the first time a major had gone into the type of picture that was bread-and-butter for me and the other independents. Shortly thereafter, “Star Wars” did the same thing. They took away a lot of the backbone of the picture we were making.
[Execupundit note: Later in the interview, Corman mentions that the Internet may permit a comeback for low-budget films. I think he's correct. The Internet may break many of the distribution barriers for small film-makers. It could be revolutionary in scope.]