I doubt that films will help people who are watching in a language that they are entirely foreign to or are already adept in, but if someone already knows a language but is not adept will watching movies in those languages improve their language abilities?
It is a form of language immersion, so yes it will most likely improve learning. Passive hearing, a fine demonstration of the decreased channel width of a non-native's perception.
Another factor: language courses that have a story (like lernu.net) instead of small situational sketches seem to give better results. (Practical experience only.) Too much in-depth stories might be contraproductive though. So the movies must be of appropriate level and subject.
I'm not a linguist, and can't cite any studies, but in my experience, watching movies in the target language (Spanish in my case) does help, because you hear it being used in context, like in real life. So if there are unfamiliar words you can often figure them out from context. It also gives you listening practice; you get used to hearing it spoken at a normal rate (not slowed down, like in a lot of things meant for learners). And it pairs visual input with audio input, which helps hold one's attention; if I had just the audio without the video I would quickly become bored. If you are familiar with the movie in your native language, that gives additional clues for comprehension, although they can sometimes be misleading, as I discovered watching the Spanish version of "How the Grinch Stole Christmas", evidently they prioritized the rhyme over literal translation, which is understandable. So watching movies has a lot of the same benefits as immersion, though it lacks the direct interaction and the practice speaking it yourself.
Movies also teach you the face and gestures that go with the words and sentences. Seeing them will help you understand and imitating them will help you being understood in the language.
Speaking from experience only: It definitely helps when I'm in the process of learning a new language as long as it's not too long or overwhelming-- it might help you get a more native-sounding accent as well if that's what you would prefer. Turning on the subtitles in the same language (ex. enabling French subtitles while watching a movie where the spoken language is mostly French etc etc) might also help you learn how to pronounce and/or spell some of the trickier words.
For sure, not. Watching movies in English is an awesome way of improving your English – especially your English speaking and listening skills. Personally, I was watching cartoons in English, after I began to watch my favorite movies. Here is the list I would recommend you to watch: “(500) Days of Summer” “The Break-up” "Forrest Gump" “The Hangover” “The Social Network” “The Hunger Games”
In my opinion, if your level is too weak in a language, watching movies, even with subtitles, will be bad for your learning. The gap between your skills and the movie's level is too important to allow you understanding comfortably what is said. The best method is (according to me) to practice with real people because you have the same context which is repeated each day. A movie has a script which contains complexe words and expressions. These dialogs are adapted for an informed public, in particular to the native speakers. We need to live a language to integrate it durably.