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Chart: How much Apple will lose from Netflix’s iTunes billing change

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The Crown NetflixNetflix show “The Crown.”Netflix
  • Apple stands to lose a substantial amount of revenue after Netflix dumped iTunes billing.
  • Netflix is currently the highest grossing app on the App Store and has to hand Apple up to 30% of user subscriptions billed through iTunes.
  • The streaming giant will force new and lapsed users to pay through its website rather than iTunes.
  • A chart from analysts at Nomura shows what happened to Apple when Spotify pulled the same trick in 2016.

Apple has had a rough time over the festive period.

In late December, VentureBeat revealed that Netflix would start forcing new and lapsed iOS users to pay for the streaming service through its website, rather than through iTunes.

And on Wednesday, Apple issued a shock revenue warning after iPhone sales and China’s economy were slower than expected.

The Netflix development doesn’t necessarily seem like a big deal, except that Apple earns a considerable amount of money from the streaming service thanks to its 30% levy on subscriptions, in-app content, and one-off payments for anything sold through its App Store.

Read more: Apple’s sweet talk about its $10.8 billion services business was totally undermined by Netflix

Basically, if you pay for stuff on apps through Apple, the developer has to hand a slice of that revenue to Apple. This applies to digital content businesses like mobile games and music and streaming services rather than apps like Uber or Airbnb, which provide real-world services.

Netflix is hugely popular and, in the US, it earned more revenue through the App Store than any other app, according to November data from SensorTower. We can assume then that it’s also the top-earning third-party app for Apple. Further figures suggest Apple could end up losing $256 million in potential annual revenue thanks to Netflix bypassing iTunes billing. So Apple is about to lose a big chunk of cash from the App Store.

Here’s what that might look like, visualised.

Analysts at Nomura noted that there’s a precedent for Netflix’s move: Spotify has been asking subscribers for years to switch away from paying through Apple. The analysts put together a chart, compiled with data from SensorTower and Instinet, showing just how that affected App Store revenue.

This chart shows that Apple will feel a much bigger drop from Netflix than Spotify:

Nomura Spotify Netflix chartApp Store revenue from Spotify saw a dropoff in 2016, after the music firm encouraged users to subscribe directly rather than through Apple.Nomura/Business Insider

This isn’t particularly good news for Apple, which is currently trying to persuade investors that its services business can make up for its slowing iPhone revenues. Apple counts revenue made from the App Store as part of its services business. It also includes the money it makes from iCloud, AppleCare, and Apple Music.

Business Insider estimates that revenue from the App Store accounts for almost 40% of Apple’s services business. You can see how we worked that out here. Netflix may not dent that number by itself, but it might set a trend for other big subscription and content businesses — like major news outlets or Tinder — likewise trying to bypass the iTunes billing process.

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More groups join in support of women in STEM program at Carleton

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OTTAWA — Major companies and government partners are lending their support to Carleton University’s newly established Women in Engineering and Information Technology Program.

The list of supporters includes Mississauga-based construction company EllisDon.

The latest to announce their support for the program also include BlackBerry QNX, CIRA (Canadian Internet Registration Authority), Ericsson, Nokia, Solace, Trend Micro, the Canadian Nuclear Safety Commission, CGI, Gastops, Leonardo DRS, Lockheed Martin Canada, Amdocs and Ross.

The program is officially set to launch this September.

It is being led by Carleton’s Faculty of Engineering and Design with the goal of establishing meaningful partnerships in support of women in STEM.  

The program will host events for women students to build relationships with industry and government partners, create mentorship opportunities, as well as establish a special fund to support allies at Carleton in meeting equity, diversity and inclusion goals.

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VR tech to revolutionize commercial driver training

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Serious Labs seems to have found a way from tragedy to triumph? The Edmonton-based firm designs and manufactures virtual reality simulators to standardize training programs for operators of heavy equipment such as aerial lifts, cranes, forklifts, and commercial trucks. These simulators enable operators to acquire and practice operational skills for the job safety and efficiency in a risk-free virtual environment so they can work more safely and efficiently.

The 2018 Humboldt bus catastrophe sent shock waves across the industry. The tragedy highlighted the need for standardized commercial driver training and testing. It also contributed to the acceleration of the federal government implementing a Mandatory Entry-Level Training (MELT) program for Class 1 & 2 drivers currently being adopted across Canada. MELT is a much more rigorous standard that promotes safety and in-depth practice for new drivers.

Enter Serious Labs. By proposing to harness the power of virtual reality (VR), Serious Labs has earned considerable funding to develop a VR commercial truck driving simulator.

The Government of Alberta has awarded $1 million, and Emissions Reduction Alberta (ERA) is contributing an additional $2 million for the simulator development. Commercial deployment is estimated to begin in 2024, with the simulator to be made available across Canada and the United States, and with the Alberta Motor Transport Association (AMTA) helping to provide simulator tests to certify that driver trainees have attained the appropriate standard. West Tech Report recently took the opportunity to chat with Serious Labs CEO, Jim Colvin, about the environmental and labour benefits of VR Driver Training, as well as the unique way that Colvin went from angel investor to CEO of the company.

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Next-Gen Tech Company Pops on New Cover Detection Test

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While the world comes out of the initial stages of the pandemic, COVID-19 will be continue to be a threat for some time to come. Companies, such as Zen Graphene, are working on ways to detect the virus and its variants and are on the forefronts of technology.

Nanotechnology firm ZEN Graphene Solutions Ltd. (TSX-Venture:ZEN) (OTCPK:ZENYF), is working to develop technology to help detect the COVID-19 virus and its variants. The firm signed an exclusive agreement with McMaster University to be the global commercializing partner for a newly developed aptamer-based, SARS-CoV-2 rapid detection technology.

This patent-pending technology uses clinical samples from patients and was funded by the Canadian Institutes of Health Research. The test is considered extremely accurate, scalable, saliva-based, affordable, and provides results in under 10 minutes.

Shares were trading up over 5% to $3.07 in early afternoon trade.

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