PSN Hack Could Cost Sony $24 Billion
by Jared Presler, posted on 28 April 2011 / 16,757 Views
Analysts across the industry have started estimating the potential cost of the recent PSN security breach. Micheal Pachter told Shacknews that in the week that PSN has been down, Sony has lost at least $10 million in revenue and $3 million in profits.
Those direct losses are likely the least of Sony's woes though. Indirect losses from the lack of consumer trust and confidence in the system will likely cost much more. Legal compensation is another potential cost. The Ponemon Institute speaking to Forbes placed the average cost of a criminal data breach at $318 for each record lost. At 77 million registered users, that makes for a hefty sum of just under $24.5 billion, and that doesn't take into account any costs associated with regaining consumer trust.
Hulu has already offered a free week of service in response to the downtime to subscribers, and Kotaku says that Sony has a range of special events and compensations planned this weekend for DC Universe Online and Free Realms. Who knows what Sony will need to do for compensation to gain consumer trust in the coming months.
And of course there's the expense of making sure that this doesn't happen again such as security investigation costs as well as rebuilding the network. Sony has asked developers to install a new SDK with advanced security features during the downtime to keep history from repeating itself.
This is a seriously expensive mistake for Sony, as is seen by the 5.2% drop in Sony's stock price since the breach.
Image from Gamingbolt.com
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@maverick40, CC details are the least important and probably least costly issue at stake, the details that have been confirmed taken are enough for identity theft on a massive scale. They could use the details to take out loans or other credit cards in a users name, with a little social engineering from the information they already have they could completely ruin many people financial lives completely, if you think that is unrealistic go do some online searches on the consequences of identity theft.
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lol ive never seen so many dumb replys in my life, does anyone know the meaning of the word 'could' as a lot of you think it means exact amount, the article reads sony hack 'could' cost sony $24 billion, there is nothing in that title that says specificly it will cost sony $24 billion their just saying it could cost sony $24 billion, no bullshit no bullcrap. ive got multiple psn accounts and none have i ever used creditcards on so that doesnt bother me as for psplus its not like ive missed anything as from october last year the games ect have been so piss poor i wont resubscribe, what does bother me is that this hacker could use my personal information to obtain money from loan sharks (people who lend money with extreemly high APR rates who are not governed by the banks ect and dont do credit scoring). if you lot want to carry on exagerating this news feed then please do for the rest of us we will carry on laughing at the abismal comments being made where you still insinuate VGC are saying the hack will cost sony $24 billion, please learn how to read (will isnt spelt could)
@OldSchoolFool: Yes. Yes it is their mistake. Their is an implicit (sometimes explicit) trust agreement between service providers and consumers to protect personal information by appropriate measures. Sony obviously did not provide enough protection, either through technology or administrator policy (depends on how the hacker got in) It is entirely their fault. If a bank vault was broken into and all of your money was taken (FDIC aside) you would blame the bank for inneffective security. I certainly would. This is the same thing.
But no credit card details were stolen so how will they have to pay out 24 billion?i am confused
Looks like SONY have messed up bad this time. Felt they got of lightly in the past with the rootkit debacle but even so 24 Billion seems a pretty toppy figure.
Sony was the one that stated it, so even if it is not true, they're going to be held to it.
the folks who made this study are not serious. they assume that 77M accounts = 77M active accounts.
The number calculations are a little overblown. But what some of you don't seem to understand is what they are referring to. This is not compensation they expect to give to users, It is what the average cost of a stolen identity will cost them, including potential legal costs, reembursement costs for fraudulent use of those details etc etc. The 3 hundred odd dollars is actually a recognised industry figure for what the average cost per user is for stolen identities in 2011, personally due to the sheer size of this I would expect that number to be much lower, but I would seriously doubt sony will get out of this for under 20-30 dollars a user (ie 2+ billion) unless they get incredibly lucky and the hacker doesn't put the identities on the black market.
Nybbas - did you just insult me? Stay classy. They're reporting an article from Forbes. Hardly the National Enquirer. Most likely to be read by quite a few more people than this site, and quite a fair percentage of Sony's investors, and stock traders in general. Just ignore it if you don't like it. If Forbes did report your wonderfully witty riposte, I'd have no doubt VGC/GF would report that - and that would be quite valid, as when "gamer news" breaks into respected mainstream sources - it's kind of a big deal.
VGChartz needs to dump this gamrfeed and go back to basics. It's bringing down the quality of the site as a whole.
lest put it this way. Sony have lost a shitload of money,trust and potential buyers, thats a fact.
@Rawnchie14, Jimmy Danger Reporting what happened isn't what is being argued here (which apparently you are too dumb to realize) It is the fact that VGChartz would post numbers like this that are CLEARLY MASSIVELY overblown, and meant to do nothing other than to generate clicks on a news story that is completely BOGUS. Sure they are just "reporting" info that came from another site, but if another site was reporting that sony is hiring assassins to kill off xbox fanbois, despite it being obviously bullsh*t, would you still defend them "OMG BUT THEY ARE JUST REPORTING THE NEWS" A news site should try to report information that is not laden with falsities and outright bullcrap.
Sony forgot what made the ps2 and psx so successful, it was easily hackable. They are so tight this generation and boastful and this is what they get. I do not like hackers, but Sony shouldn't be fighting them so hard. Especially nothing is 100% secure, so don't be so arrogant next time. This generation was bad for Sony because they were so arrogant in there actions.
I hope those damn Hackers are caught and hung, and then brought back to life so they can be lit on fire, and then have the skin pealed off of there bodies. That would be completely just in my opinion. I'm afraid to open my Paypal account now because of the of those worthless, fools.
@ JimmyDanger You're right bro. My know nothing about video gaming family were asking me whether anything happened to me regarding this Sony PSN debacle, b/c it was on the nightly news. This broke through typical tech news, this is a big deal - especially since the mainstream public will now chime in their opinions on this issue very soon.
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@AOK Games And what do you think that source did? Blindly reported on obviously, obviously phony news that anybody with a high school level education of finances should be immediately suspicious of without bothering to check their sources website. Same as VGChartz. Eventually someone needs to take the responsibility to check the source of the source of their story. That's what journalism is. This article isn't journalism. It's regurgitation.
Like it or not - this is news. VGC are just reporting the news. In case you didn't know - it's a pretty big story. Easily the biggest gaming story to break into the mainstream media this year- eclipsing Kinect or 3ds reports. So there's a win for Sony right there. To paraphrase one poster - if you don't like it "go back to your cave" and cover your ears. Or just don't read it. Simple.
some people need to go out more and breath some fresh air because they are letting these type of article get into them way too much.
Who the hell writes these stupid stories. Sony does not have 77 registered users, it has 77 million accounts. For instance I have 4 accounts alone. Now if you take 1 account for every 50 million PS3's sold, that would equal $480 each. Then work out that not every PS3 owner has a PSN account, so that number at the $24 billion would be nearly a $1000 a person. So now, someone thinks that Sony is going to pay $1K to each PSN owner, for a service which is mostly free, for a service that they did not break. It's not going to happen, especially if you read the TAC fine print. The only costs that Sony are liable to pay are for PSN Plus, for Queerocity, and Maybe Hulu. (Netflix and Vudu still work) In reality, Sony will probably offer everyone a free 3 months of PSN Plus, (An extension if you already had it), they will probably offer numerous free games, and free download content for the bigger multiplayer games. They may also offer a $25 or $50 PSN credit too. This is not going to cost Sony the fortune as people say. In reality, I would not be sup prized if Sony lowers the price of PS3 as soon as PSN comes back on line, and in fact could make the service stronger than it once was. So, if you think you are going to get a $400 to $1000 check, you will be bitterly disappointed. And that class action will get blown out of court faster than Bill Clinton did by Monica.
Dont think the cost will go much over $1 billion at most. Biggest cost will clearly be gamers buying and playing on ps3. PS3 just dropped to the bottom of the console pile (not that it wasnt there already)
@ bannedagain and naruball Hey, wise-asses. You see where it says 'source'? See how the numbers came from a website called 'GamesIndustry?' VGChartz didn't write the article. They didn't come up with the numbers, either. They're linking to them. Try reading more carefully and you won't look like such a moron.
I think this will be the reason they start charging for PSN. However this number of 24 billion is just a joke. There is no way it cost that much. VGCHARTZ reliability of information = SH-t Like the guy said bellow It's got to be over trillions of dollars. 999 trillion sounds good. Hey VGCHARTZ write a article that it could cost 999 trillion dollars. I swear i have a good source, Foxx news. lol
I cannot believe you ran this piece. I simply cannot. This is forum garbage at its best and you ran it.
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Seriously I wonder why VGchartz is finding it difficult to post articles supporting a tech firm during their adversities. We keep reading jokes instead!! Sony stole ur ID, ur stuff stolen nine days ago and 24.5 billion dollar joke...
"Indirect losses from the lack of consumer trust and confidence in the system will likely cost much more" whoever propagated that is wanting users to deliberately bash the console...I bet when PSN's up, it going to be much more secure and a compensation awaiting in one form or the other...24 billion dollar seems a joke!!
stupid thing is the lawyers suing sony for this are saying there doing for the consumer, when really since they know this a big mess for sony they are just trying to be greedy little basters and fill the pockets with more money while Sony is down. Micheal Patcher gtfo why even bother listening to that loon, his ego is worst than Floyd mayweather jr. the dumbest thing is this matter will be tied up for years so why bother in the first place let alone it will most likely be settle outside of court.
To be honest I'm not too worried - if nothing happened to my Credit Card yet, it probably won't happen. I'll keep buying things off PSN... Soon people shall forget this, as well. Now I'm curious if Sony will cut some prices off PS Store or some other cool deal. lol
i will be fucking amazed if damages approach anywhere near 1 billion, let alone the bullshit just posted in this article. It is just irresponsible to post garbage like that.
5.2 % holy crap that's a pretty large drop. It'll surerly be back up again
Seihyouken ''If any one actually went to the Ponemon Institute's website they'd find a nifty databreach cost calculator. Entering in the information we have been given by Sony regarding the security breach the Ponemon Institute estimates it will cost Sony less than $20 million.'' I have a unwritten rule to not post stuff about games on facebook, but two of my friends posted Sony related news on my wall today. Neither of them are even into 'console news' as much as the average person on VGchartZ. All this noise has to stop, because if $20 million is indeed the sum (and it does seem a good estimate to me) then it's just another case of the media being pathetic and sensationalistic over absolutely nothing.
Those figures are absolutely ridiculous. So in someone else's words that could as well have been mine: Seihyouken ''Unfortunately this is impossible. And it's fairly shoddy journalism to be reporting this blatantly false information. I'm disappointed VGChartz.''
VGChartz needs to stop posting STUPID articles, there have been at least 5 unnecessary articles that only ad fuel to the fire. Problem is they they don't provide anything worth reading, and yet many people will read them and think it is true. If there is a suit it will take years to get this whole thing figured out. Keep in mind that many people have more than 1 account, including me. I think only 20% of 77 million actually have credit cards attached to them and those were encrypted anyways. I think SONY will loose revenue from possible sales that could have occurred while PSN was down. Sure there will be some disappointment and certain amount of brand tarnish. But with great E3, better explanation of new changes and improvements as well as price cut thing will return to normal within 2 months assuming PSN is up by end of this week. SONY will be fine, they will spend more money on advertising and pushing their products. And VGChartz please filter some of those artilces better, if there is nothing good to report, then why bother, you are only making it worse for SONY and alienating people like me who care about REAL NEWS not stuff that someone made up while picking his nose while playing some HALO.
@nintendology SEGA had a slow death by its own mistakes and i believe that s where the big difference with sony really is.sony s "outside" attack was what upset everybody and the things about the personal data and the delays by the company itself.noone knew what had really happened.and that i believe is the biggest mistake sony did.to conclude i also think it is sad for a company to go out this way.personaly i dont believe its going to end this way.even if the loss is indeed 24 billion the future of sony might be secure.the companys market share is significant.someone will be found to contribute for a large number of stocks.like what happend with microsoft and apple back in 2000.
@Nintendology You talk like Sony is the only company that ever had a breach like this. Have you heard of these companies? Citibank, JP Morgan Chase, US Bank, Kroger, Walgreens, Best Buy and TiVo. These companies have been breach and we are talking about banks here and im pretty sure you have some sort of association with one or more of these establishment in some ways. These were breach recently too. Do you still shop at Best buy? if you going to be afraid might as well go hide in a cave and hunt your own food and make your own stuff because if you either have a bank account or credit card you will always be prone to fraud. Its a way of life, you as an individual can minimize it by taking precaution but you can never guarantee that you will be safe from fraud. You can say you will move onto the xbox 360, but what happen if they are breach too? will you give up gaming all together? I highly doubt that. The only good thing that comes out of this is that hopefully Sony learn from their mistakes and prevent this from happening again. With this happening to Sony, I think Sony will be implementing a much better security system in place, probably making your data much more safer now.
Unfortunately this is impossible. And it's fairly shoddy journalism to be reporting this blatantly false information. I'm disappointed VGChartz. The estimate of $318 per record lost is an average based on circumstances completely different from Sony's. The simple math of $318 average for unrelated circumstances x 77 million PSN accounts is so incredibly stupid that only a 10 year old could possibly have come up with it. If any one actually went to the Ponemon Institute's website they'd find a nifty databreach cost calculator. Entering in the information we have been given by Sony regarding the security breach the Ponemon Institute estimates it will cost Sony less than $20 million.
@ Nintendology Yes because Sony just handed the info right over to the hackers. Obviously the hackers who did this know what the hell they're doing and they succeeded in breaching past their security. This can happen to anyone. When Live went down for 11 days back in 2008, Microsoft never provided a reason as to why it went down. Whats not to say it happened to them as well and that's a paid service - you expect a paid service to serve you well, and it didn't. I owned a 360 during that time and was absolutely pissed off that the service I paid for was unavailable for 11 days with no reason. Go ahead and call me blind, I'm just trying to be optimistic about this whole thing. They released a statement saying that there's no evidence of credit card information being stolen and we still went ahead and put that fraud alert on anyways.. it literally took minutes. Anyways don't flame me for having a different opinion then you please.
hey sony, before you screw up again. When you release this new secure PS3... DONT GO AROUND CALLING IT HACK PROOF! see what you did this time? dont tempt them to bring you down. again. sony could have been more descrete about handling the homebrew incident instead of parading him out there to be made an example out of. See what that got them? Love it or hate it, it has been done and it is what it is. They tried to protect their product but instead ignited a shit storm.
@vr6GOLFr32 "It doesn't make me trust them less because hackers breached through their security. For people to completely boycott a brand because of an issue like this where it hasn't even affected anyones financial status yet is completely absurb. " It is hardly absurd. Nothing has happened yet, but what do you think these hackers will do with the identities of 77 million people? Even if they do not use the information for fraud, the fact remains that Sony allowed unscrupulous individuals to obtain private information. It is genuinely scary to see how deluded and myopic your perspective is. Who blindly follows a corporation? Sony screwed up and have put people at risk for credit fraud, identity theft and worse.
also the nuclear reactor crisis isnt a crisis anymore as the reactors are now stable, and the BP oil spill has been cleaned up however this problem for sony isnt a natural disaster that can be fixed over night, while sony fight the hackers by renewing and updating security the hackers will just try harder and cause more problems for sony, fact is 'anonymous' wont stop untill sony agrees with their demands so like i said before dont just assume sony have or are fixing the problem.
Government fines + stock losses + inevitable class action lawsuit I'm sure will yield a couple billion in damages, but not $24 billion. That would be the maximum if every single tiny thing went wrong. Not that a couple billion is any small thing. This is a pretty big disaster for Sony, but it's not going to sink them.
Meh. My girlfriend went to her local bank branch and they put a fraud alert notice on her credit card. We're both not concerned about what could happen anymore.. maybe people should be smart and do the same. I on the other hand will continue to enjoy my products from Sony regardless of this breach. It doesn't make me trust them less because hackers breached through their security. For people to completely boycott a brand because of an issue like this where it hasn't even affected anyones financial status yet is completely absurb. I honestly think people are just raging so hard (that's what she said?) over this because the PSN isn't up yet and people are just being babies about not being able to play online. They look at the competitor and go "zomg! they haz online but WEE dontz?! im zwitching NOW!#" Wrong topic? maybe. I'm trying to shine a little light on this disaster that has struck Sony in the past week. Maybe everyone else should too. They've done what was necessary to enhance their security to avoid having this problem again. Can we just say "lesson learned" ?
@Proedros Indeed. Sony's total assets are worth $114 billion, and they have an equity of $30 billion, but $24 billion up front is more than they can muster. Sony does not have that kind of on hand cash, despite having film studios, a record label and being a leading player in consumer electronics. This could financially ruin Sony. This is their "SEGA" moment. It is sad that a single generation of Sony mistakes has had as bad an effect as a decade of SEGA failures.
Keep in mind there are certain factors : How many of those PSN users are unique users? How many of them actually used credit cards? How many are concerned/informed enough to file suits? How many (if any) would actually win? Still, this whole thing is ugly and keeps getting uglier.......like yo mama! Oooooh! In your face!!
anything above a couple of billions combined with the lack of trust will bring the whole entertainement sector of sony down,even maybe the entire company!if you consider that the company s NET income for the 3rd quarter was 886 MILLION $ while apple s for example was 6 BILLION $ and samsung s 3 BILLION $ you can see that is impossible for a company even as big as apple to lose 24 BILLIONS!
what really gets me is that some people think this problem with sony being hacked by 'anonymous' will be forgotten in about a months time yet no one forgot what happened last year when the old ps3's screwed up by thinking it was a leap year, plus as 'anonymous' still have plans for more petitions and further hacks on sony dont go making the assumption that this is gonna go away IT WONT, and dont forget 'assumption is the mother of all f*** ups'.
$24,000,000,000 divided by ~50,000,000 PS3 consoles = $480 When do I get my check??? *I am using 50million because there are roughly that many PS3 consoles out there
If your going by stocks then your maybe right but this isn't a permanent thing just one bad error they can fix. @djneibarger is right no one will care about this in a month.
Wow, Sony really screwed up big. What's wierd is that while the Xbox 360 and Wii were hacked for piracy ages ago their networks were safe. The PS3 took longer to hack but when it did it was a disaster. I'm guessing that Sony will use security more like MS and Nintendo on their next system rather than something like the PS3's.
@djneibarger I wouldn't call this a catastrophe anywhere near as bad as those things but you're right it will be forgotten in a month.
$24 billion? C'mon. You guys can do better than pulling random numbers out of your ass. I'm sure the Ponemon people were talking in some kind of context which is clearly lost here. Total annual game industry revenues in the US are less than $24 billion. Unless the entire PlayStation division was literally just destroyed by this security breach, they aren't losing $24 billion.
I doubt it's a 24 bil lost and this always happens to company's for W/E reasons. As fast as they lost money they can get right back on their feet in no time when PSN comes back.
If it was actually going to cost Sony $24B the stock price sure would have dropped more than that. It's going to be expensive, but Sony would probably go bankrupt with a $24B loss. The cost will be big, but I really doubt it will be that big.
meh, a month from now the gamers and web journalists will have forgotten about this, the same way the American news machine has already forgotten the nuclear reactor crisis in Japan and the BP spill on it's own shores.
Well i dont hate the ps3 i like alt of what it has brought to the table, my main bitch is the loss of my info and the delay. But i wouldnt want them to take a hit like this, competition is good.
This is absolutely insane, i've always supported Sony for what they've done for gaming, i dont want to see them go out like this. i really hope these hackers are caught! although i dont know if that would reverse some of the cost issue!
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