Boris Sagal’s The Omega Man (1971) was based on Richard Matheson’s 1954 novel I Am Legend. Wikipedia’s description of the book’s setting: ” a pandemic … has killed most of the human population and turned the remainder into ‘vampires’ that largely conform to their stereotypes in fiction and folklore: they are blood-sucking, pale-skinned, and nocturnal, though otherwise indistinguishable from normal humans.”
The protagonist, Robert Neville, appears to be the only survivor of the pandemic. He spends his days patrolling Los Angeles, looking to kill vampires with wooden stakes. and his nights inside his apartment, looking to stay alive. Matheson says that he occasionally screens movies for himself but doesn’t name them.
Sagal and screenwriters John William Corrington and Joyce Corrington decided to show Neville (Charlton Heston) actually watching a film — not at home but out in the world. (A previous film version was The Last Man on Earth, 1964, with Vincent Price — no movie in movie.) The present day of The Omega Man is 1977; the pandemic had hit seven years earlier, when Woodstock was playing in theaters. Neville, it appears, has developed an odd obsession with that documentary, perhaps because the utopian hippie dreams in it appear so quaint in the light of his harsh world.
He’s equipped one cinema with a generator. We see him power it up, spool the film in a projector, and watch it for the umpteenth time, his rifle lovingly cradled beside him.
His comment at the end of the clip is an example of a cliche made literal.
Matheson’s book got adapted again in 2007, under Francis Lawrence’s direction and with Will Smith as Neville. This time, his much-watched movie is Shrek, and he watches it at home with a mother and son with whom he’s joined forces. That mirrors the Shrek scene, where the characters voiced by Mike Myers and Eddie Murphy form an alliance of their own.