Sony Playstation Breach Costs Estimated to be $171 Million

Yesterday, Sony announced that it had taken a $3.18 billion net loss for the fiscal year now ending that it attributed in large part to having to write off "deferred tax credits banked during the past two years of deficits," the Financial Times of London reported. In addition, the company said that this year's earthquake and tsunami "...did major damage to our supply chain and created the risk of lasting electricity shortages" which would "distort" the company's profitability for the next two years.

Sony will now have posted losses the last three years in a row. This year its revenues are projected to be $88.3 billion.

According to other news reports, like this one at the LA Times, Sony says that it expects the cost of the Playstation Network (PSN) breach to be around Y14 billion, or around $171 million. The cost includes, the Times says, "... rebuilding its computers, paying for credit protection services for its customers and compensation to customers, including free products and services."

Some are calling the sum of $171 million highly optimistic, to say the least. Billions of dollars may be more like it.

Sony's expected cost does not include the various lawsuits that have been brought against it, or, at least from what I can find, the loss of revenue from existing customers switching from their Playstation system to those of Sony competitors or new customers deciding not to purchase a Playstation in light of the breach and subsequent security-related issues that seem to crop up almost daily.

Last week, for example, Sony had to fix a security hole in its new PSN login procedures; there was a reported phishing site operating on Sony servers located in Thailand; and an Internet service provider subsidiary, So-net Entertainment,  admitted it had been hacked.

Then yesterday, there were reports that Sony Music Greece was hacked and customer data stolen (which Sony confirmed today) while Sony Music Indonesia's web site was reportedly defaced. There are also reports this afternoon that Sony also has taken down the Playstation site today from 0800 PDT to 1700 PDT for account maintenance.

Sony Chairman Howard Stringer said last week that the Sony PSN breach was merely a "hiccup" in the company's online strategy, but I bet that all these IT security ankle-biters are getting more than a bit wearisome - and ever more costly - to deal with.

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