Playstation 3 hacking - Sony could face legal action
Image via CrunchBase
Sony Corp could face legal action across the globe after it belatedly disclosed a security breach of its popular PlayStation Network, infuriating gamers and sending the firm's shares down 5 percent in Tokyo today.
Sony shut down the network on April 19 after discovering the breach, one of the biggest online data infiltrations ever, but did not tell the public about the theft until Tuesday.
In the United States, several members of Congress seized on the breach, in which hackers stole names, addresses and possibly credit card details from 77 million users. One U.S. law firm filed a lawsuit in California on behalf of consumers.
``Gamers are angry that Sony's CEO hasn't come out to explain the situation and investors are disappointed over the company's corporate governance.'' said Michael Wang, manager of overseas funds at Prudential Financials in Taipei, which owns shares in Sony.
Sony's PlayStation Network, a service that produces an estimated $500 million in annual revenues, provides access to online games, movies and TV shows. Nine out of 10 of PlayStation's users are based in the United States or Europe.
Gamers could ditch Sony and analysts said people looking to buy a video game console could steer toward Microsoft Corp's Xbox, which has its own popular online network.
``I am outraged that my personal information may have been accessed by hackers.'' said Rich Chiang, a PlayStation and Xbox user in Shanghai.
Security experts said Sony would need to account for the loss of business -- as well as damage to its brand -- when it tallies up the cost. Other costs include notifying customers of the attack and bringing in experts to cleanse its network.
Larry Ponemon, chairman and founder of the Ponemon Institute, said the theft could cost Sony more than $1.5 billion, or an average of $20 for each of the 77 million customers whose data was potentially compromised. Poneman's firm specializes in securing information on computer networks.
Sony said the delay in notifying the public was needed to conduct a forensic investigation but it is fast becoming a public relations nightmare akin to Toyota Motor's bungled response to a giant vehicle recall last year, fuelling criticism of corporate Japan's standards of disclosure.
Neither Sony CEO Howard Stringer nor Kazuo Hirai, who was appointed to the company's No. 2 position last month after building up Sony's networked services, have commented publicly.
Sony shares closed down 4.5 percent after falling more than 5 percent at one stage, while the broad market rose 1.6 percent. The stock has now lost more than 8 percent this week.
Some fund managers said the impact might be contained.
``Shares of Sony have already reached the low since the earthquake so I think further downside is limited. Investors who buy Sony are buying on its growth in PlayStation. Gamers usually will not stop playing just because a single incident.'' said Prudential Financial's Wang.
Older/Newer
« New Wii console announced as Nintendo profits fall | Mobile phone users 'held hostage' by providers »
2 Comments
Leave a comment
Profile
Ben Hurst
They won't stop playing no, but when the next generation consoles arrive and we have to choose between sony and xbox, there is likely to be an exodus towards xbox.
i am outraged and sadened by the people who have hacked into the playstation network,although my view on this is that sony should of had more security on such delicate personal information on ps3 users my sympathies go out to them. i think someone from sony should try and find out who the perpetrator is and give the information to police or the officials so they can imprison them for fraud, then when that has been accomplished sony can relax and re-figure the psn, they need to act fast because this is going to hit sony hard and they could loose customers, the network has been down for weeks and this is losing the majority of ps3 users as online play is a massive part of gameing today, yes i can understand it happening once but a second time WHILE there doing maintenence is rediculous, i hope sony can achieve this because i have been a fan since i was young and i would hate for there reputation to go down hill since they were on a role. so come on sony get it together and get the ball rolling again.