The issue isn't MIT competing with itself, it is, as the OP mentioned, MIT online competing with the second tier "me-too" institutions out there that are charging the same tuition for a far inferior experience. If you are considering getting a degree from a university few people have heard of or respect but will have to pay the MIT price for, you will at least have the option of choosing the online route to achieve a potentially superior education. The choice will be more and more difficult as online universities get A-listed and solve the many problems they currently have with their user/educational experience.