It is.

A university offers a lot more than just classes--one of the primary functions is just to bring together lots of smart people. Being able to talk to both other students and professors face to face is important; and having plenty of other like-minded students around is great for more than just classes.

On top of this, universities also offer research. Being able to work on something exciting while you're there is important. And research benefits both from having a high concentration of smart people and having the appropriate facilities. (It also sometimes benefits from having a university full of guinea pigs :).)

Also, while most CS classes are easy to move online, this does not hold for other technical subjects which need equipment and labs. An online-only EE or Bio or Physics class cannot reproduce the hands-on experience which is very important to understanding the material well.

I think its important to distinguish that a lot of EE, biology, or physics classes could moved into an online format because not all of these classes are labs. The demos would be easy to replicate just as part of the videos of the lectures.

I'm a graduate student in the sciences and every biology, chemistry and physics class that I took had a lab, except the evolution class. You could put the lectures online, but universities will never be completely replaced, as long as people want to learn science or do research.

>as long as people want to learn science or do research

Maybe this will create a large demand for amateur level/mass producable/cheap lab equipment and that would eventually lead to a situation like PC vs Server where even top notch servers are ~ comodity hardware on steroids. This would lower the barrier for innovation significantly.

hmm, at Caltech (my school) the courses are very much divided into either lecture courses or lab courses, and the phys/chem/bio majors probably have 2/3 lecture classes and 1/3 lab classes. The lecture only classes could very easily be put into an online format.

Yeah, my wife is a physicist and is very excited about this trend.

Blockbuster is more than videos. It provides jobs to youth and sells snacks to customers. All of which is irrelevant to their basic economics when people stop buying from them.

If 10-25% of students decide to learn online, a university's budget is seriously compromised.

This could shutter a lot of the teaching-focused universities.

It wouldn't really work the way you are thinking. If 10-25% of applicants to the college I went to decided to go to Udacity instead, my college would have had exactly the same number of freshman and wouldn't notice a dollar difference in its revenue. They already only admitted X% of the people who wanted to come in, where 0%<X<100%.

So these online college courses aren't going to kill regular universities. They might make the odds of getting in easier as some people forego normal college for online school.

Likely the schools that currently struggle to fill their classes (lower tier schools, for-profit schools) will go out of business, but these online classes simply aren't going to hurt the big colleges.

I'd say traditional universities will most likely move to similar platforms rather than just going extinct. This is because Universities provide more value than just the classes, like research.

I think it can be successful in a niche, but won't go too far.

Universities have two main components: teaching and research. Udacity has a quite competitive teaching model -- there are cons compared to traditional schools, but also some pros.

But they don't have a research model. For a professor to leave their school and work somewhere like Udacity, they have to pretty much give up their research in favor of the opportunity to teach many students (online), and the money. Some may be willing to make the tradeoff, but most of the best professors won't and probably never will.

That's why I think the most successful online teaching programs will be affiliated with traditional universities. In CS, you could argue that the monetary resources needed to do research aren't as high, and you don't need specialized facilities. Maybe so. But you still need colleagues and collaborators -- especially in other fields like biology or engineering -- and you need grad students. And trying to do an online PhD doesn't sound very viable or desirable.

And in other fields than CS, where you absolutely need facilities, centers, etc to do research, it will be even harder to attract good faculty to a place that has none of these. You could build them all and bring in grad students, but then you're just a copy of a traditional university with no undergrads, and it's not clear why you didn't just partner with a traditional university in the first place.

So, this model may attract large numbers of students, but because of the research angle I don't see schools like these gaining the prestige and reputation necessary to draw students away from most traditional colleges.

That prestige issue goes away real fast for most students if the degree lets them get a job.

That is the prestige issue.

Traditional research universities will be around for a long time. Good online schools may eat in to the commuter-campus types of schools that are mostly teaching centers. This would include a lot of the regional campuses of major state schools.