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PSN hack could cost Sony $24 billion

Security expert estimates potential cost to Sony, as Pachter downplays significance

Security experts have attempted to estimate the cost of the ongoing PlayStation Network security scandal to Sony, with suggestions ranging from around $20 million to $24 billion.

Wedbush Morgan analyst Michael Pachter, speaking to website Shacknews, suggests that PSN generates around $10 million in revenues and $3 million in profits per week. The service has already been down for over a week now.

However, Pachter's estimate does not take into account indirect losses from reduced customer confidence in the service and nor does he address the question of legal compensation. In his opinion though: "If they offer some free stuff and continue to follow up, this will all be forgotten in a few months."

According to data security research firm The Ponemon Institute, as quoted by Forbes, the average cost of a data breach involving a criminal act is currently $318 per record.

Forbes suggests that with 77 million registered accounts worldwide this creates a potential cost to Sony of over $24 billion.

US streaming video service Hulu has already offered subscribers one week's credit as a result of the service downtime, with website Kotaku reporting that Sony Online Entertainment will offer a range of special events and compensations this weekend for titles DC Universe Online and Free Realms.

In related news, reports suggest that Sony is asking developers to install new SDKs (software development kits) on their PlayStation 3 development kits during the PSN downtime.

According to Gamasutra the new SDKs include advanced security features, meant to avoid any repeat of the current problems.

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Latest comments (17)

Andrew Goodchild Studying development, Train2Game5 years ago
I'm guessing that means it was the custom firmware that allowed normal PS3s onto the dev network then?

On a side note I misread that firme name as the Pokemon Institute for a second, which was confusing.
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James Poole Managing Director, Sarcastic Hedgehog Ltd5 years ago
I understand that 77.3% of all statistics are made up on the spot
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Robert Kelly5 years ago
@andrew I've been keeping a close eye on this and some people have said that it wasn't the custom firmware "rebug". The holes this thing used were patchable without having tho bring down the network. Perhaps this suggests that it was something else..
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Show all comments (17)
Terence Gage Freelance writer 5 years ago
"Forbes suggests that with 77 billion registered accounts worldwide"

And they say PSN users don't have more than one account, huh!
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.5 years ago
The $24 billion figure would be valid if only the 77 million were individual accounts. Using James' statistics model, I'm betting the number of individual accounts is only about 33% of that figure.
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James Johnstone5 years ago
hahaha if anything the hacker should be sued for all the data loss, not sony. The hacker should be charged 24 billion dollars...which he/she couldnt pay and so life sentance in prison! mwahahah!
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James Johnstone5 years ago
hahaha if anything the hacker should be sued for all the data loss, not sony. The hacker should be charged 24 billion dollars...which he/she couldnt pay and so life sentance in prison! mwahahah!
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Andrew Goodchild Studying development, Train2Game5 years ago
@james. Firstly they haven't found the hacker/hackers yet, so how are you going to sue them. Secondly, what would be the point of customers suing them if they weren't going to get compensated (criminal action is another matter). Thirdly, getting sued in a civil court, and being unable to pay doesn't generally end up with a jail sentence, Bankruptcy is more likely.
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Tom Halls Creative Account Manager, Electronic Arts5 years ago
"If they offer some free stuff and continue to follow up, this will all be forgotten in a few months."

These don't sound the like the words of someone considered to be a 'guru' at predicting trends. Not that those considerations are right.
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But Tom, hes right:
People will forget and forgive Sony if they give some free stuff to the users.
I believe it will cost a lot less than a billion, but "just" a lot of millions.
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Peter Dwyer software engineer, openbet5 years ago
Genarally free stuff does work but, ask yourself this. How willing will you be to trust Sony with your personal details ever again?

How many will not just put in gumf data and a valid email address the next time a Sony registration page presents itself?

In the long run this may well end up consting a lot more than a few millions.
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Well, personally I think I'll have more trust in Sony now than before - they've been bitten hard, they'll learn the lesson better than most out there.
The real question is the cost this security breach could have for the broader digital payment industry, word is now out that big players aren't much safer.

All in all however, I just remember that my credit card is protected for such problems, so the real complaints may come more from banks than consumers once the storm has passed...
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Stephen Swires Studying BSc Computer Science for Games, University of Bradford5 years ago
Has Michael Pachter ever been right about anything?
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Andrew Ihegbu Studying Bsc Commercial Music, University of Westminster5 years ago
@shann

That's making the rather large assumption that they learn from their lessons. Which does not seem to be the case. I mean, they had their PSP firmware, PS3 firmware, websites, online network including payment systems, user databases, possibly future console data if another article here is to be believed.

Do you really want to give a billion dollar corporation which had enough money to fix all these problems before they ever happened your details again? Bearing in mind if something happens to it you will spend the rest of your life on hold on their customer support line being charged 1 a min to be connected to someone who barely speaks English and doesn't have a clue what you're talking about.

That's big business for ya.
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Tom Keresztes Programmer 5 years ago
@James,

"Never trust a statistic you didn't fake yourself."
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Andrew Goodchild Studying development, Train2Game5 years ago
You can prove anything with statistics, 40% of all people know that

Edited 1 times. Last edit by Andrew Goodchild on 1st May 2011 11:59pm

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Chris Bartholomew Graphic Design / Marketing 5 years ago
Just let us download a SONY game title of our choice. That would shut most of us up. I don't want 30 day free of something I do not use (or would continue to use if I had to pay). Affirm that my card and my account (I am one of the few ones with only one account I guess) are as safe as can be (for a gaming device - we do not need Pentagon level retina scans) and lets MOVE ON! At least get the PSN part of the network that allows us to play our games we already own and disable Credit card stuff.
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