1888 as the name of a theater in Boston; by 1909 as "a motion picture theater," from nickel "five-cent coin" (the cost to view one) + -odeon, as in Melodeon (1840) "music hall," ultimately from Greek oideion "building for musical performances" (see odeon). Meaning "nickel jukebox" is first attested 1938.
The nickelodeon is the poor man's theater. An entire family can obtain from it a whole evening's amusement for what it formerly cost to get one poor seat at an inferior production. ["The Moving-Picture Show" in Munsey's Magazine, 1909]