As is this writting the PSN and SOE are still down and Sony is issuing fairly hollow apologies to world + dog over it’s latest customer abuse. The company is also starting to offer goodies in order to lure customers back to the service and rebuild trust in the company.
Sony is also rebuilding their entire network in record time, which means HUGE bills in security firms, technicians, licenses, etc. In the meantime, regulators around the world are sharpening their claws to hit Sony really hard and make it pay for any damages caused by the hacking.
What will be the result of this mess? Well, nobody can say. But some trends are already visible and we already have one BIG loser: Sony. Let’s see where Sony will lose.
The PS3 only hardcore gamer will probably get back to the PSN as soon as possible, he has no other choice and would have to spend a lot on an XBOX and even more to re-buy their their vast collection. Also, some titles are PS3 exclusives, so those are not going anywhere. Although the loss of the password and email address are a nuisance, it is not the end of the world, and most people will not drop Sony for that.
Things change a bit if you are a customer of the PSN Store. Your credit card might or might not be compromised so you will have to cancel it as soon as possible or try your luck. If you are a SOE customer living in Netherlands, Austria, Spain or Germany you might even had your bank account, home address and everything else compromised. This IS a true headache and one that Sony is being fairly slow to address, even compared to the glacial pace of their other messaging.
But the worst loss for Sony is trust. You might trust an email address to Sony after this debacle, but would you trust your credit card number again? Would you trust your bank account number to a company that puts your entire data in an unpatched server without a firewall? You might, but thinking people won’t, and the net result of this will be less customers spending money on PSN and SOE, which means less revenue or at least a severely hampered growth.
For a company expecting to become a top content online seller, this will be a heavy hit with far reaching consequences, as less revenue will hit not only Sony but also their partners. The PSN will become less attractive as a platform for developers, and the cost for buying exclusive content will skyrocket. If developers decide to stick with Sony, how will they be compensated for lost revenues?
Second the breach will affect the PS3 as a platform. Some gamers who own a PS3 and a XBOX360 will choose games for the later when they can because of security. Less sales means less revenue for Sony, which means less money to fund exclusives. This lowers console sales, and makes the PS3 a far less attractive platform for developers. It is a death spiral.
Sony will also be hounded by angry users who will demand compensation in courts, and it possibly sue Sony in every single country where they sell the PS3. Expect to see lawsuits appearing like mushrooms, and this whole affair to drag on for years.
Last, but not least, regulators will demand compensation and fines at Sony and they won’t come cheap. That will pale in comparison to the money that Sony ends up paying to the credit card companies, but that information is unlikely to ever become public.
All in all it is sad to see a company so concerned about piracy on its console being so negligent with its user’s personal data. They did a good job in ensuring the developer’s trust in their platform but an appalling job in ensuring the user’s trust on it.
Even now Sony cannot come out of this mess in a clean way. Did it explain why it will upgrade the super-secure firmware of the PS3? Are there other known vulnerabilities? Those are questions that Sony should answer if it plans to rebuild user’s trust in it. Then again, if you look back at the way they treated users over the CD rootkitting, don’t hold your breath waiting for an adequate response.
While this mess does not end, the market is already smelling blood, and Sony’s stock is showing the strain. Since the beginning of the outage Sony ADR few some 12%. In other words, considering lost revenues, compensation, extra costs, settlements and fines, the market seems to be pricing Sony rather irresponsibility.
At least Sony’ shareholders may feel secure knowing that, with the constant the string of self-inflicted problems over the past few years, their legal team is up to the task ahead.S|A