I think it works well with some majors, definitely. To compete, they will need to offer more than simple lectures. Economic majors will have to have more behavioral experimentation and you can't compete with physics majors who have a freakin' laser beams to play around with.
Though, getting my degree in economics, I now think it would have been smarter to do it at home. The worst thing that hurt my grades was being too lazy to walk to class. Once I did work online, my grades went from Cs to As.
Let's be honest. The online classroom is never going to be able to offer keg parties and college co-eds. And that's just what the physical campus might be reduced to if they can't compete with the quality and cost of the online education. That and high end science research institutes.
Technology in education will create a much needed divide between instructions and interactions. Brick and mortar Universities will preserve the interaction model while tech companies will take over the pure instructional realm.
My prediction: Technology ends up making universities more money than ever.
I just don't buy the idea that somehow the people who invented this tech (MIT media lab and others) are going to be obsoleted by their own creation (the internet).
Though, getting my degree in economics, I now think it would have been smarter to do it at home. The worst thing that hurt my grades was being too lazy to walk to class. Once I did work online, my grades went from Cs to As.