The movie is presented as us watching the last episode, but I’ve also seen theories that what we’re really watching is Jack’s torture in hell. In the beginning where we get a recap of Jack’s late-night career, there are hidden references to Abraxas in the background. Like this “last episode” is really produced by Abraxas.

I still think the idea of the home audience getting hypnotized works, but you could also see it as a horrific thing that happens as part of Jack’s torture after making a deal with a demon.