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Wall Street expectations for Netflix in 2019 after price hike: Analysis

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Netflix could face one of its toughest years yet in 2019 as more services from the likes of Disney and AT&T enter the streaming war.

But the overall Wall Street consensus is positive going into Netflix’s Q4 earnings on Thursday, with analysts seeming optimistic about Netflix’s recent price hike and the streamer’s chances against the competition this year.

Many analysts anticipate good news on January 17, when Netflix will report its earnings for the last quarter of 2018, even after Netflix increased its prices on Tuesday, effective immediately for new subscribers and within three months for current users. It’s increasing prices by 13% to 18%, and its most popular plan will see the biggest hike, from $11 to $13.

Stifel was optimistic that Netflix could execute the pricing increase in a report released on Tuesday, but was cautious on domestic subscriber additions in Q1 of 2019. Instinet sees the price hike having short-term effects on subscriber growth, but doesn’t “see it as a long-term detriment,” analysts said in a Tuesday report. And analysts from RBC said that the increase “has a high probability of success, further fueling the Netflix flywheel,” in a report released Tuesday.

READ MORE: Hulu gained on Netflix in the US during a year of massive user growth, but there’s a big challenge it will have to overcome in 2019 to keep up the pace

‘We see the potential for upside…’

For Q4 of 2018, Stifel expects that Netflix gained 2.035 million subscribers domestically, which would exceed Netflix’s own projection of 1.8 million. Internationally, Stifel estimates that Netflix gained 7.757 million subscribers.

UBS sees an upside in Netflix’s Q4 subscriber growth, due in large part to positive download trends of the company’s mobile app and strong search trends.

“We see the potential for upside to Q4 domestic and int’l sub guide given solid app download ranking, credit/debit card spend, & OTT consumption data, Google search trends (pointing to a well-performing Q4 slate) and 3rd party data,” UBS analysts said in a Thursday report.

“Emerging markets in Latam & Asia (e.g., India) are the bright spots on local language content push,” UBS continued.

Netflix announced 17 new Asian original programs in November in an effort to break through, since the company had yet to exceed 2 million subscribers in any Asian market. Of the 17 originals, most hailed from India, where Netflix is fighting hard to gain traction since it can’t operate in China without a local partner.

“We expect subscriber momentum will continue as Netflix continues to improve its service and the global shift to streaming broadens and given the strong 2H18 growth performance,” Credit Suisse analysts wrote in a report published on Thursday.

Netflix is expected to have a solid 2019 even as more competitors emerge

Disney is expected to launch its own direct-to-consumer service in late 2019, called Disney+, and Morgan Stanley analysts said in a report on Friday that they believed Disney could succeed in the the crowded streaming market. But the analysts also said three factors kept them positive that Netflix could, as well.

“First, we believe Netflix’s opportunity comes from the nearly $500bn global TV market, of which total subscription OTT still represents less than 5% of revenues,” Morgan Stanley analysts said. The analysts said there could be multiple winners in the streaming video (SVOD) space, and that linear TV viewership would continue to decline.

The Morgan Stanley analysts predicted most traditional TV/studio owners would not pivot to streaming, and instead opt to “live in the studio side of the streaming value chain, producing exclusive first-run content for Netflix, rather than launching global branded streaming platforms.”

Netflix will rely less on licensing agreements

Netflix will continue to transition away from licensed content and toward its own originals in 2019.

Original content will be more important than ever as more streaming companies throw their hats in the ring. Even though Netflix has invested heavily in original programming over the last year, some of its most popular shows, like “Friends,” are still available through licensing agreements.

Netflix and AT&T, which bought Time Warner last year, recently agreed that “Friends” can remain on Netflix through 2019, but that AT&T would also be allowed to have the popular sitcom on its own streaming service when it launches this year.

Disney also ended a deal with Netflix last year, and all of its content starting with “Captain Marvel” will be available on Disney+ after leaving theaters.

Morgan Stanley analysts pointed to a shift toward Netflix originals, which it said was evident in Netflix’s financials.

“First, the growth in licensing obligations to third parties has slowed, declining ~15% YoY on a per sub basis in 2018,” the analysts said. “This is a function of licensing commitments burning off faster than they are being taken on as the business grows. Second, cash spend on content not tied to pre-existing obligations – a rough proxy for in-house production – has ramped to over $5bn in ’18,nearly doubling YoY to ~40% of annual cash content spend.”

Netflix was trading around $351 per share on Wednesday.

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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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