Yes, Christians can watch movies. However, we must be careful and not watch that which is inappropriate. Of course, Christians should avoid movies that openly violate the teaching of the Scriptures. Therefore, we are not free to watch pornographic movies or films that incite hatred, bigotry, and rebellion.
But, what about movies that depict violence, fornication, or science fiction, or musicals? Are we free to watch those? This cannot be easily answered because there are so many different movies with so many different levels of violence, sexual innuendo, language, and inappropriate themes, that it is impossible to give a blanket approval or condemnation regarding all movies.
Therefore, Christians should visit Christian-based movie review sites and use their own judgment regarding what movies they should see. If Christians were to vote with their pocketbook and support good movies but not the bad ones, Hollywood would eventually come around.
So, are Christians free to watch movies? Yes. Just be careful and use Godly discernment in what you go see.
Note: CARM provides movie reviews at http://carm.org/reviews