The Orville show explores this idea, before LLMs became a thing. Simulators become the replacement for movies, but the simulations are still designed by a person (or alien).

The concept feels more like a video game than a movie in the show, but presumably you could program the simulation to happen around you instead of you moving through it.

there was a TV commercial in the 1970s that suggested this would happen in the future. Knowing Seth MacFarlane, that's where he got the idea.