Long but relevent (and hopefully interesting) post ahead for people wondering about/hoping for a third movie. TLDR version: The economic reality is that if there is one, and it's not a reboot way down the line, it'll probably go straight to video (though I'd be happy if it weren't!). Details below:
The movie business is a cruel mistress. Considering the financial performance of Revelation it's highly unlikely we'll see a third film anytime soon unless it goes straight to video or gets a limited theatrical release. The movie made $50 million worldwide on a $20 million production budget, true, and Bassett confirmed it made money for the producers. But Open Road, the US distributor, spent $20 million on marketing and distribution, plus whatever it cost to buy the rights in the first place. They only got money from the North American box office, since it was released by different companies everywhere else.
They didn't even make $20 million in North American box office just looking at the total numbers - and you also need to keep in mind that the actual theatres take a cut of the box office, so the distributor typically only gets about 60%. That'd put Open Road's take at less than $11 million against at least $20 million in expendiatures.
Of course, they also get money from DVD/Blu-ray sales - or they would, if they were doing them, but Open Road actually decided not to burden themselves with the financial responsibility of doing that release and licensed it out to Universal Home Entertainment instead. Obviously I don't know what kind of contract they have in this specific instance, but usually this sort of deal amounts to a flat rate licensing fee where the release company (Universal, in this case) gets the money from the actual sales. Open Road spared themselves the expense of mounting a release and marketing campaign on home video, sure, but they also likely cut out any chance of making money from said release outside of whatever Universal paid for the rights (and there's very little chance they paid $9 million for a theatrical flop).
In short, it's probably the case the US distributor lost money on the movie. Obviously, that means they won't be terribly excited to repeat it with a third film. Of course, Columbia pictures distributed the first film and declined the second, which is why the sequel had to be released by such a new, small-time distributor. Open Road losing money on the film effectively cuts a hole in that minor-studio "safety net" - other, similar distrubutors will also be much more wary of releasing a Silent Hill film in theatres now.
It's very likely that Davis Films is all for making another one; they made money on Revelation, and in interviews even after the disappointing opening weekend, producer Samuel Hadida seemed excited about the possibilites. The problem is that they finance movies through pre-sales; essentially, they sell the "package" to distributors before the movie is made. They'll say "it's going to be a movie in such-and-such franchise, with so-and-so writing and directing, and him-and-her starring, in 3D" - and see who's interested in distributing the movie in their company's territories. If all goes well, these companies buy the rights to release the movie in their country before the movie actually exists.
The money Davis Films makes from these sales is then used as the film's production budget, spent on actually making the movie. In some cases, films will be entirely financed this way, which is great for the producers because they've broken even before the movie ever opens. Sometimes it's simply a portion of the budget. In a company like Davis Films' case, it's a very large portion of the budget or even the entire budget. Therefore, the interest of distribution companies (and their belief they can actually make money by buying the rights and releasing the film) is the single biggest factor in a movie actually getting made.
Different countries' distributors will pay different amounts for a movie depending on how much they think they can make on it. Obviously, this means the bigger the country's film market, the more it's worth. The US is currently the world's largest and most valuable film market (though China is gaining ground pretty fast and India is nothing to sneeze at). That means a really big chunk of change to make the movie comes from a US distributor. And since Open Road didn't do well as the distributor for Revelation, it's very likely the required interest (and money) will not be there.
Some countries' distributors will probably be interested in a Silent Hill 3. In Russia, for example, Revelation did quite well. It opened at #1 in Hong Kong, Thailand, and Malaysia. It also did quite well in Ukraine. It cracked the top 3 in several other small territories as well. The issue is that, with the exception of Russia, these are very small markets. In most places in the world it performed similarly to America, opening at #5 or below and dropping fairly fast. There's no guarantee these distributors will have any interest in releasing another Silent Hill in their countries, and if they aren't, there goes the production money which is desperately needed in the probable absence of a US distributor.
Distributors will only buy the film rights for less than they think they can make - quite a bit less, since they will also need to spend money on marketing and still turn a profit. So even though Revelation made $13 million in Russia, no Russian distributor in their right mind is going to offer anywhere near that amount for a third movie. The bottom line is that it will be pretty hard to actually raise the money to make another film. $20 million will be almost impossible.
Even if they do manage to raise enough money from foreign distributors to make a movie, they still need a distributor to get it into US theatres. As previously mentioned, that will be very hard now. Some companies like Freestlye Releasing specialize in putting out independent product other studios won't touch and sending them into wide release. They take a flat fee and none of the box office revenue, and manage marketing and distribution. That sounds great, except they don't actually PAY for the film prints or marketing; that's all on the producers or a third-party company. And their results speak for themselves... in a pretty piss-poor way. Any success at Freestyle is a fluke. Their biggest hit was The Illusionist, which made $40 million... but was a co-release with a different company. Their biggest hit without another company was An American Haunting at just under $20 million after adjusting for inflation. Their average for a wide release is only about $5 million. In essence, they're for people who are desperate to get their movie released at any cost (their work with Uwe Boll after Lionsgate, Artisan, and Romar dumped him is a good indicator of this). It's not likely Davis Films would go this route; it's too expensive since they'd have to pay Freestyle and still do their own marketing, and the return on investment would probably be pretty damn low.
If they can raise any sort of money for a third movie it'd probably be closer to a DVD movie budget. Since they'll have a hard time finding theatrical distribution, that's a good match. Assuming Revelation sells well on home video and on demand, this is actually a pretty decently plausible possibility. This is the route that's kept franchises like Hellraiser, Amityville, and Children of the Corn alive. Anchor Bay, Dimension, Fox, and Lionsgate do this a lot (hell, Fox has made 4 direct-to-video Wrong Turn sequels in the past six years). Of course, the quality of said franchises' direct-to-video movies is... questionable (though Daniel Licht did work an an Amityville and a Children of the Corn, coincidentally).
So who knows. Maybe some day in the next few years there'll be a third flick about Silent Hill, West Virginia in our Netflix queues. Or none at all. But on a theatre marquee? Sadly, probably not.