Hackers have dealt a serious blow to Sony's strategy to create an ecosystem of online content around its devices by bringing down its online game system PlayStation Network and Qriocity services.
While the financial repercussions of the ordeal are yet to hit Sony, Forbes cited estimate by the Ponemon Institute, a data-security research firm, which calculates the cost of breach at $318 per compromised record which translates to about $24 billion.
IndustryLeaders magazine reported that Sony's annual revenue from the PlayStation Network from sales of downloaded games, music and movies is estimated to be about $500 million. Thus a two week outage will put Sony back by $20 million.
Sony was compelled to shut-down the PlayStation Network in April after hackers siphoned personal data of about 80 million users. WSJ reported that Sony later confirmed that hackers had also broken into its San Diego based online unit, Sony Online Entertainment, further affecting 24.6 million users.
Disgruntled hackers have been able to dent Sony's strategy to position its PS3 as the central entertainment hub the living room. Tim Ingham of Computer and Video Gaming Magazine told CNN: Sony has positioned PlayStation 3, not as a games console. Indeed, it's come out and said it sees it as an entertainment hub that sits in the middle of the lounge and provides movies, TV.
The strategy is largely dependent on Sony PlayStation Network as the delivery of online content depends on the smooth functioning of its online platform.
WSJ reported that Sony has long envisioned creating a network strategy around its devices which would allow it to deliver content from various portals rather than creating standalone products.
It is emulating companies like Amazon and Apple which have created platforms to deliver content to their respective devices like Kindle and iPad. Like Apple allows users to download music from iTunes.
Like Apple Sony had crossed a major hurdle in that it was able to create a database of 77 million account holders on PlayStation Network with many of them having registered their credit cards to avail its online services. PlayStation Network allows PS3 console users to play games with other users and to download music, games and movies.
The breach has hit Sony badly as possibly scores of users' credit card details might have also been compromised. Sony will have a tough time regaining the trust of its users. However in a letter Sony sent to publishers regarding PSN outage Sony said : As of this writing, there remains no evidence that the credit card information was stolen and the major credit card companies are still reporting that they have not seen an increase in fraudulent transactions due to this event.
Key to Apple's iPad and iPhone success is its iTunes which offers Apple a perfect platform to deliver content and allow safe transactions through credit cards. Sony was in a similar position whereby it could have tapped the 77 million account holders primarily the once who had parted with their credit card details, an edge which now seems to have been diluted.
Sony was also using Sony PlayStation Network's infrastructure to support its online service Qriocity to offer streaming music and video content to its devices.
However Sony is leaving no stone unturned in its attempt to get back to pursuing its cherished strategy. In fact in a corporate message on Thursday Sony said: We preparing to resume the service as soon as possible in Japan are now doing the verification stage to ensure the safety and security.
The challenge for Sony is not merely to restart PlayStation Network but also to gain users confidence which is integral to its creating an ecosystem of content around its devices.