Will higher ed look more like Netflix in a few years?

The half-trillion dollar higher-ed market is about to experience massive upheaval, dragging along with it an entire supply chain – textbook publishers, real estate, credit and banking, food service, and technology…and the survivors may surprise you!

Mark the four-year college industry as almost boiling!

The signs are all around us and the picture is unsettling if our recently completed war game has predicted accurately: Cooper Union, a tuition-free school for the last 150-plus years just announced this past week that it would start changing tuition because of persistently nagging deficits. Massively online courses run by virtual platforms such as Harvard-MIT joint venture EdX or California’s Coursera are registering more than 250,000 students from around the globe for free college-level courses. Where does this leave higher ed and all the industries supported by it? It is in big, long-term trouble, trouble that will persist and will cause hundreds of US institutions to inevitably close.

Here are some of the conclusions we came to in the war game, The Battle for the Educational Industrial Complex:

• Tuition and cost pressures will force traditional four-year colleges to outsource their most basic courses, often taken by students during the freshman and sophomore years, to online providers or to deliver themselves at a lower fee than today’s on-campus tuition.
• Land grant institutions, such as the University of Florida, Michigan State, or the University of Massachusetts may become the power brokers in higher education, employing distance learning vehicles to attract large numbers of prospective students who may not ordinarily qualify for their four-year traditional programs, allowing them to accumulate courses and credits should these students decide to enroll in the full four-year college program.
• The Massively Open Online Courses (MOOC) of the world, such as Coursera and the Harvard-MIT joint venture, EdX, will play the Netflix courses-on-demand card, serving up both basic and specialized courses from a wide swath of the higher educational landscape.
• As an increasing number of traditional schools offer online alternatives, distance learning focused institutions, such as the University of Phoenix, will lose their competitive advantage and will likely be forced to seek revenues by licensing their technology platforms to the four-year colleges who are already becoming hybrids, offering both online and classroom experiences to students.
• Corporations will form open partnerships with universities to help guide institutions to producing graduates who can meet workforce needs, rather than produce graduates who are mismatches with the workplace. Is Comcast College or FedEx U the future of higher education?

I am not sure if the Harvard’s and the Stanford’s have a lot to worry about when this roller coaster begins its ride but you can be sure that all the hundreds of small liberal arts institutions and general purpose colleges will face existential threats. What can they do about it? Plenty. Just consider the potential corporate partnerships, plans to service the non-traditional student and the co-opetition with the Courseras, the MOOCs of the world. All these can extend or even enhance their current market position. Most of all, keep monitoring your markets, track those quickly morphing MOOCs and the more agile non-traditional schools. These are your bellwethers.