Terry Gilliam claims that one of the reasons his film adaptation never happened is that the cost of reproducing the story faithfully on the big screen was put at roughly one million dollars per page. This would easily make it the most expensive movie ever made.
Watchmen fans such as myself, of course, would contend that the book is worthy of such extravagent treatment, but Hollywood types could perhaps be forgiven for not taking the chance. It is rumoured that a number of less faithful story treatments were commissioned, with one major Hollywood screenwriter of the time contributing a script which completely warped the plot so that the villain of the piece turned out to be none other than Doctor Manhattan, who is attempting to alter the course of history to prevent his own creation. Maybe an interesting concept for another movie, but not really on the same level as Alan Moore's original denouement, which must rank as one of the greatest endings in comics, not to say fiction in general.
Darren Aronofsky, director of Pi, Requiem for a Dream and the forthcoming Batman: Year One (which is presumably based on the Frank Miller comic of the same name) recently expressed his desire to one day bring this opus to the screen, but apparently was not even aware that Gilliam had previously attempted this superhuman feat.
All in all, much as fans would like to see this terrific story exposed to a mass audience via the medium of film, we should probably be grateful that Warner Brothers have yet to cash in with a cheap and nasty version which bears little or no resemblence to the original work.
Alan Moore's From Hell, however, is very definitely being made into a film, starring Johnny Depp and Ian Holm.
One other note on Watchmen is that it won the Hugo Award for "Other Forms" in 1988.