Seriously, do we really need character arc?
I used to rail against arc as an artificial construct, a silly cliche. In real life, people seldom change. So why should they in movies? Snake Plissken does not arc. Indiana Jones does not arc. Ash in "Army of Darkness"--you kidding? No fricking arc! Clearly, arc, like theme, is an artifice unnecessary to the telling of a good story.
And yet, crikey, there's something about it. We're human, and thus the possibility of someone overcoming a challenging personal issue, changing themselves (yes, absolutely, MUST be for the better) in a movie gives us hope, makes us feel good about ourselves and brings us emotionally closer to the character.
If done right it should be incremental, an evolution. In fact, formula dictates that that protagonist be oblivious to his character flaw in Act 1 (although *everyone else* is aware of it), finally becomes self-aware at page 60 -- but is still unable to actually do anything about it yet, and then when the evolution has taken place, finally in Act 3 the protagonist can rectify the situation.
Just try to do this to in real life. Chances are your dysfunctional brother-in-law or manic depressive girlfriend or whomever will not appreciate your attempts to "improve" them.
Certain genres, of course, are arc-resistant. Action/adventure and horror, your protagonists don't need arcs (although it doesn't hurt to have them.) Why was 'Star Trek II" the best of the Star Trek movies? Certainly it had the best pacing and script, but it was the also the movie in which Captain Kirk arced. And in those moments where he came to accept his aging and get his mojo back, we really felt for this suddenly humanized iconic character.
But let's be clear--arc IS important, and despite the fact that we all know it's there, like mythic formula we've seen a million times, it still works, and you should use it. Because if you don't, it's just giving the reader another reason to PASS ;)