The future of the university

If one takes this video (Daphne Koller: What we're learning from online education) seriously, I wonder what the future of universities is, especially those in developing countries or non-top schools in developed areas.

Let's assume that person "A," who lives in a small town in country "Z", will go to college. 

She can choose among: 

1) a prestigious school in the US that, with founding from a foundation, offers accredited online degrees such as the ones Koller is talking about. 

2) a public university for free (that is, tax funded), or 

3) a private university where she has to pay around US$ 1,200 a year, or US$ 6,000 for 5 years. 

If she takes an economic decision based on costs and benefits, she will factor in the prestige of the US University, the personalized approach of the online degree, and the lower cost. Chances are she will chose the prestigious school.

If the behaviour of person "A" generalizes, demand for public and private schools in country "Z" will go down, but it will not be zero. 

The question is: what is the future of the existing schools in this context? To survive they will have to focus on the academic tasks that can not be massively delivered online, such as:

1) Applied research to serve their local communities (social sciences, health, etc.)

2) Post-graduate degrees (MAs and PhDs), although low-cost online programs will come as well. 

3) Teaching classes that need hands-on work in areas like engineering or medicine, etc.  (although it is already possible to dissect a cadaver digitally :).  

To summarize, the new way of delivering online education will bring an international division of labor where local schools will have to be involved in the applications of the knowledge learnt online.

They could very likely become applied research-and-teaching universities.