I noticed recently that they just released The Nativity Story on DVD. They hope to recoup their losses from the theatrical run:

After a disappointing theatrical run in December and early January, releases to DVD today-a tale of the birth of Jesus just weeks before Christians worldwide observe his death and resurrection at Easter.

“I think it’s good timing,” director Catherine Hardwicke told CT Movies. “And I’m excited that a lot of people are going to be seeing it for the first time. So many people have told me they missed it in the theater, and that they can’t wait to see it.”

The “can’t wait to see it” part of that observation is good news for New Line Cinema, which spent about $65 million making and marketing the film, but only earning about $46 million ($38 million domestically) in its theatrical run. The studio will likely more than recoup its losses in DVD sales, especially as they plan to release a two-disc special edition just before Christmas.

[…]
A January story in The Los Angeles Times explored possible reasons why the film didn’t do very well. Laurie Foos, a student a Fuller Theological Seminary, told The Times she tried to see The Nativity Story on Christmas Day, but the local theater had already dropped it. Foos said she might have tried to see it sooner (it opened Dec. 1), but hadn’t heard anything about the film in the Christian community: “I wish there had been more awareness,” she said. “It was lacking that kind of ‘Oh my gosh, you have to go see that movie’ factor.”

They weren’t given enough time by the studio to promote the movie in the churches like they did for The Passion of the Christ.
If you haven’t seen it yet, I recommend that you watch it. I took Sarah to see it when it came out and we loved it. It brings another dimension to the story, usually when the story of Jesus’ birth is retold we don’t focus on what life must have been like for the Jews under the oppression of Rome and an insane king, Herod. This movie helped us to see what life was like and why the people were so focused on a Messiah who would come to set his people from from the oppression of Rome.
The setting was realistic and the events pretty much kept to what you think would happen if a betrothed Jewish girl became pregnant. The movie doesn’t down play the violent aspects of the time. Girls taken from their families to pay for the taxes, and Herod ordering baby boys to be slaughtered. It’s not a romanticized picture but one that was realistic and made you feel like you were there.

Christianity Today has a very good review. The reviewer was a lot more observant than I was:

The film also makes some interesting allusions to people and events from the future ministry of Jesus. As Mary and Joseph make the arduous journey to Bethlehem for the census, they buy one of their meals from a Galilean fisherman-might his name be Jonah (father of Peter and Andrew) or Zebedee (father of James and John)?-and as they pass by the Temple in Jerusalem, Joseph expresses his disgust with the hucksters there, the same hucksters that Jesus will chase out one day. Even better, when Herod’s troops attack the babies in Bethlehem, one soldier looks inside the cave where Jesus was born, and finds an empty manger-an image that brings to mind the empty clothes that Jesus’ disciples will one day find in his tomb.

I think that it’s a great movie to own, so that you can bring it out every year around Christmas and watch it along with “A Charlie Brown Christmas,” “A Christmas Carol” and “It’s a Wonderful Life.”