Are we in the universities going out of business? Not if society demands that we guarantee the Core competences of our students.

There are a small number of universities and colleges that may well be able to stay roughly the same as they are now in the next two decades. But they will be dwarfed by other institutions that:
--provide masters programs, often without much financial aid from the institution, that meet societal needs as defined by adults;
--accommodate veterans who have very substantial governmental benefits, and who want to obtain undergraduate and graduate degrees. Just as at the end of WWII and the GI Bill, these students are unlikely to want to relive their adolescence,  or be willing to be subservient to faculty. They are very used to respecting authority, and so they are excellent students, if the faculty realizes how serious are those student-veterans.
--in effect guarantee that their graduates can write, think, and do mathematical work at professional levels, and master a foreign language. Let me call this THE CORE. The problem is not that degrees may demand a broad background or have strong theoretical components.  Right now many graduates, those with strong grades included, are not adequate writers, thinkers, and or mathematically competent, and they do not speak and read important languages in the world.

Yes, there are the massive online courses, distance education, etc.  I do not believe that the above demands will be met unless these popular "innovations" provide the masters degrees, accommodate veterans, and insist on students become professionally competent in language and mathematics and thinking, the Core. In fact, I suspect that once we demand that the university guarantee these fundamental skills at a high level, the demands on faculty will be greater, the need to face-to-face classes will go up, and the physical campus might well become essential.

Most of the current innovations do not guarantee professional competence in the Core, even if lots of technical material is well mastered. For innovations do not address the Core, for the Core demands a level of personal interaction that is very demanding. Veterans know this from their work in the armed services where they learn to be effective soldiers from interacting with their peers and their superiors.

The call for tests that will guarantee or certify Core competences is a sign that people do not realize what those competences really are. If students can produce a suitable portfolio of writing, if they can master statistics (not by getting an A, but by using the methods in actual work), if they can produce algorithms to do important computational work, and if they can write an essay in another language and carry on a conversation in that language.

College life won't go away. But universities that depend on college life, doctoral research training, and research grants will have a harder time unless they address the deep needs of modern society. These universities have become larger because they now admit much larger fractions of the society, and their student body of children of the rich and alumni (those legacies, Harvard's "happy bottom quarter") is just not even adequate in their skills. And it would seem the nerds and grinds and ethnics (people like me!) are still a small fraction of the entering class. The armed services say that only about 1/4 of the potential recruits have the skills needed for a modern military. Corporations find that employees cannot write, manufacturing employers cannot run efficient enterprises since their employees do not read. Professors, teaching in doctoral programs (me!), find that 1/2 their students or more do not write coherent sentences, focused paragraphs and essays, or know how to survey a scholarly literature. (I'm willing to believe that at the most elite institutions none of these problems are present, but in fact my colleagues tell me otherwise.) We know that students did well in their earlier education, for they have good grades and high scores. But they can't do the basics in the Core. They may know lots, they may be effective leaders or bureaucrats, but in the end they don't know how to read or write or do arithmetic. Of course, probably 1/3 are fine, but that's not enough.