Credit Card Breach May Cost Sony $24 Billion

[-|-]

but we cant forget that Sony is a company who released a product they thought that people would enjoy and it would be a real shame to see people lose their jobs because of this...

I agree. Wanting a company to go bankrupt, wishing harm on others? Shame on you fellow escapists.

 

[erztez]

Anyone else read "Ponemon Institute" as "Pokémon Institute"? Or is this topic too serious for that?

I did

OT: I feel sorry for any PS3 owner at this point. They did nothing to deserve this.

Well, they DID buy a PS3...
That, in and of itself does not prove mental incapacity, but it does go a long way towards that...

Funny I remember people making that statement about the 360's RROD issues.

And it was as true then, as it is now...
At least MS doesn't rip parts of the console out to "fight piracy"...
Also, why would anyone buy a PC with bad cooling, locked down OS, bugs galore, and no chance of upgrade stuck into a small plastic case is beyond me.
The only console that can still be called that without, well..lying, is the Wii, and that's a piece of crap gimmick.

EDIT: Just to say, I own all three of the current generation consoles.
Got 'em for free. Will never spend a cent them.

 

[erztez]

Spoiler

but we cant forget that Sony is a company who released a product they thought that people would enjoy and it would be a real shame to see people lose their jobs because of this...

I agree. Wanting a company to go bankrupt, wishing harm on others? Shame on you fellow escapists.

If I believed in a deity I'd be praying for Apple to go bankrupt and Steve Jobs to get killed by being repeatedly sodomized with anything that has a lower case i in front of its name.
Seeing as I don't, I just have to HOPE that's what happens.

As for Sony, maybe not bankrupt, they do make the occasional decent TV. Lose their gaming division? Yes, please...

Mod Edit: Multiple warnings in one post

 

[MissGinaKid]

I feel really bad for Sony right now. It seems like ever since the launch of the PS3 they keep having strings of bad luck. I'd hate to see Hackers be a nail in the coffin of the Playstation.

 

[erztez]

I feel really bad for Sony right now. It seems like ever since the launch of the PS3 they keep having strings of bad luck. I'd hate to see Hackers be a nail in the coffin of the Playstation.

It ain't bad luck.
Bad business decisions lead to bad outcome.
Rootkits, overpriced PS3, no PR, it adds up.
I'm still amazed that some people are willing to put their trust into these guys...

 

[Popido]

I wanted them to get hurt and now they are hurt. So Im happy.

in all sincerity fuck you, thousands of sony employees and countless first party developers are going to be seriously affected if they don't lose their jobs, this is going to cause MASSIVE damage to the industry regardless of what side you're on

Agreed, even if you hate Sony, do you really want to see the ruin of so many people? I'm by no means a liberal minded person, but willing thousands to be jobless is quite callous.

I agree with what you said. I mean c'mon, people should exercise some hindsight before saying bullshit like 'any harm that falls on the company is good'.

Happy is actually too strong word for this. I hoped they would had changed, but that seem'd unplausible. So I thought, tough love would be needed. And here it came. I know I should feel sad for them and people involved, but I got what I wanted, and pity is the last thing you want from me.

Shit happens. My mind wont falter.

Not that I disagree with you peeps, but from my view, things are looking pretty interesting.

 

[JDKJ]

This isn't the bankruptcy that the article makes it sound like. It's not just clean up costs. It's total costs. Sony can and will easily weather $24 billion IN TOTAL COSTS. TOTAL COSTS. TOTAL COSTS. TOTAL COSTS. TOTAL COSTS.

Actually, no, they can't. Using the figures from their FY10 statements (which was the year they were making money as opposed to losing money or breaking even), Sony's adjusted operating income (which includes affiliate net income and equity) was a little under 4 billion in USD. This was for ALL of Sony's business and not just the video game division.

So, for Sony to absorb this loss, they would have to be able to post the same adjusted income (which, with the loss in consumer confidence, is an improbable statement) for the next 6 years just to break even after $24.5 billion added to their total costs. When they first released the PS3, they had $9 billion in liquid assets but they were burning through that up until 2009 when their losses were down to a few hundred million. So, presuming that they devoted 2010 income to replenishing their savings, they would optimisticly have 6 billion saved. Even with that, that would still be 4 and a half years of breaking even with income remaining at 2010 levels.

And this presumes that the economy doesn't weaken, consumer demand remains high, there are no class-action lawsuits, and people are still interested in the PS3 years down the road. Even if they broke the 24.5 billion up into a ten year payment plan that didn't charge any interest, this would still be an near-impossible burden to shoulder.

Now, given that the Escapist tends toward a lot of sensationalist "The Sky is Falling" stories, I don't think that the penalties will be this high. But, if they are, Sony is pretty much "dead man walking". The only variable at that point will be to see how badly the rest of the gaming market crashes if Sony does go down in flames. The people cheering this might find out firsthand what it was like in the 1983 gaming crash.....which would actually be kind of hilarious.

Your forgetting that many of these "losses" aren't actual out-of-pocket losses. They're touchy-feely losses like "diminished customer trust and confidence" churn and "the extrapolated value of customer loss resulting from turnover or diminished acquisition rates" and "discounts for future products and services." Those aren't real world costs and therefore aren't paid out of real world income -- not in the sense of being a debit on Sony's books.

Moreover, the OP's math is a fuzzy as fuzzy math can be. He only arrives at the $24 billion by multiply $300 per record by the 77 million total number of records in Sony's possession and subject to breach. But that assumes that each and every record in Sony's possession has been breached. At this point and on the known facts, that $25 billion figure is about as accurate as any other number I randomly pulled outta my ass.

 

[-|-]

As for Sony, maybe not bankrupt, they do make the occasional decent TV. Lose their gaming division? Yes, please...

Huh - that makes no sense at all. Why? If you neither own a PS3 or plan on purchasing one why does it's mere existence bother you so much?

For anybody reading your posts it looks like you are one of those people that needs to validate their own purchases and lifestyle choices by trashing those of others. Don't worry about this though - it's quite common for people to do this; it's a crutch that helps them feel like they belong.

 

[Treblaine]

Valve is smaller than Sony and if this guy can hack the DOD why is anyone surprised that a CE company like Sony got hacked.

http://en.wikipedia.org/wiki/Gary_McKinnon

Size is irrelevant here, it's what you do with it. Some of the biggest and most powerful organisations around can be breached simply because they take a deeply flawed approach to security.

Small size can be a benefit:
-lower load of users to manage
-less of a target: fewer user detail to nab
-quicker to roll-out changes
-easier for one technician to visualise

Valve is not just run by computer geeks it is founded by computer geeks, these guys live, breathe, eat and sleep. This is a company that is proud to announce a 5% improvement in network efficiency in a patch that comes almost every week.

Sony was (and I suppose still is) the par-excellence of consumer electronics and that is their failing, they are too hardware focused. They put the security FOR A NETWORK in the product and now they are paying the price for that, they tried and failed to get at Geo Hotz only to look like bullies. Now their device is open something they never seem to have even considered and their network is so badly compromised it's like the cylons are in town.

Microsoft has paid for their hardware ignorance with Xbox 1's huge size, and cost ineffectiveness, then when they tried to push those limits they suffered in reliability. But they are good at online. Kind of a rip-off at times but they know the business, in fact Xbox is more of a means to an end of their service ideas while for Sony PSN is a means to the end of PS3's success.

 

[Treblaine]

He only arrives at the $24 billion by multiply $300 per record by the total number of records in Sony's possession and subject to breach.

It's not even by the "number of records" but the number of user accounts.

Also there are 4 user accounts on my PS3, one for myself and three more for my sister, brother and a third so I could screw around with save games. Only one of them has ever had a credit card used with them. It's so easy to create new accounts yet I think like most people only 1 of the accounts per system actually has ever had a credit card used on it.

 

[JDKJ]

He only arrives at the $24 billion by multiply $300 per record by the total number of records in Sony's possession and subject to breach.

It's not even by the "number of records" but the number of user accounts.

Also there are 4 user accounts on my PS3, one for myself and three more for my sister, brother and a third so I could screw around with save games. Only one of them has ever had a credit card used with them. It's so easy to create new accounts yet I think like most people only 1 of the accounts per system actually has ever had a credit card used on it.

Actually, the Ponemon figure of $300 is per "document" breached. I have no idea how that "document" translates across to Sony's record-keeping, but I am willing to assume that the more innocuous a document is, the less cost associated with its loss. If it's a "document" like a credit card number that's gonna cost ya. A "document" like a record of the score you made the last time you played on-line ain't worth too much in costs, I'd imagine.

 

[erztez]

As for Sony, maybe not bankrupt, they do make the occasional decent TV. Lose their gaming division? Yes, please...

Huh - that makes no sense at all. Why? If you neither own a PS3 or plan on purchasing one why does it's mere existence bother you so much?

For anybody reading your posts it looks like you are one of those people that needs to validate their own purchases and lifestyle choices by trashing those of others. Don't worry about this though - it's quite common for people to do this; it's a crutch that helps them feel like they belong.

As I stated before, I DO own a PS3, just that I never gave Sony any money for it.
And yes, the fact that the PS3 exists does bother me, it's a sign of deeper problems within the game industry(not the PS3 hardware itself, but the way it's being marketed and supported).

As for me needing to validate my own purchases, well...that would only be the case if I felt that my purchases needed any validation, wouldn't it?
As it stands, I don't feel that they do, especially from random people on the internet
If I ever feel the need to buy a 20ft golden statue of Xenu, you better believe I will do just that.

 

[thepyrethatburns]

Your forgetting that many of these "losses" aren't actual out-of-pocket losses. They're touchy-feely losses like "diminished customer trust and confidence"churn and "the extrapolated value of customer loss resulting from turnover or diminished acquisition rates" and "discounts for future products and services." Those aren't real world costs and therefore aren't paid out of by real world income -- not in the sense of being a debit on Sony's books.

Moreover, the OP's math is a fuzzy as fuzzy math can be. He only arrives at the $24 billion by multiply $300 per record by the 77 million total number of records in Sony's possession and subject to breach. But that assumes that each and every record in Sony's possession has been breached. At this point and on the known facts, that $25 billion figure is about as accurate as any other number I randomly pulled outta my ass.

Fair enough and that's why I mentioned sensationalism at the end of my post. Even if it wasn't sensationalist reporting, it would be unlikely that Sony would have to pay that much in the end.

However, my main goal was to argue against the idea that Sony could weather a 24 billion dollar loss much less easily. While Sony is a giant from our perspective, they are not THAT big. Frankly, I'm not sure that Microsoft could weather a 24.5 billion dollar loss. Microsoft's anti-trust settlement in 2003 was, by way of comparison, 2.6 billion and that was considered to be a large hit against Microsoft.

So I stand by my closing statement. IF Sony did have to pay 24.5 billion, they'd be out of business.

 

[-|-]

As for Sony, maybe not bankrupt, they do make the occasional decent TV. Lose their gaming division? Yes, please...

Huh - that makes no sense at all. Why? If you neither own a PS3 or plan on purchasing one why does it's mere existence bother you so much?

For anybody reading your posts it looks like you are one of those people that needs to validate their own purchases and lifestyle choices by trashing those of others. Don't worry about this though - it's quite common for people to do this; it's a crutch that helps them feel like they belong.

As I stated before, I DO own a PS3, just that I never gave Sony any money for it.
And yes, the fact that the PS3 exists does bother me, it's a sign of deeper problems within the game industry(not the PS3 hardware itself, but the way it's being marketed and supported).

As for me needing to validate my own purchases, well...that would only be the case if I felt that my purchases needed any validation, wouldn't it?
As it stands, I don't feel that they do, especially from random people on the internet
If I ever feel the need to buy a 20ft golden statue of Xenu, you better believe I will do just that.

Oh yeah - you are right. The PS3 is evil and the way it's being marketed with *gasp* adverts saying that it's a console that you can play games on is going to bring down the entire industry. How could I have missed that?

 

[erztez]

Your forgetting that many of these "losses" aren't actual out-of-pocket losses. They're touchy-feely losses like "diminished customer trust and confidence"churn and "the extrapolated value of customer loss resulting from turnover or diminished acquisition rates" and "discounts for future products and services." Those aren't real world costs and therefore aren't paid out of by real world income -- not in the sense of being a debit on Sony's books.

Moreover, the OP's math is a fuzzy as fuzzy math can be. He only arrives at the $24 billion by multiply $300 per record by the 77 million total number of records in Sony's possession and subject to breach. But that assumes that each and every record in Sony's possession has been breached. At this point and on the known facts, that $25 billion figure is about as accurate as any other number I randomly pulled outta my ass.

Fair enough and that's why I mentioned sensationalism at the end of my post. Even if it wasn't sensationalist reporting, it would be unlikely that Sony would have to pay that much in the end.

However, my main goal was to argue against the idea that Sony could weather a 24 billion dollar loss much less easily. While Sony is a giant from our perspective, they are not THAT big. Frankly, I'm not sure that Microsoft could weather a 24.5 billion dollar loss. Microsoft's anti-trust settlement in 2003 was, by way of comparison, 2.6 billion and that was considered to be a large hit against Microsoft.

So I stand by my closing statement. IF Sony did have to pay 24.5 billion, they'd be out of business.

Nah, they'd have to liquidate some assets but it wouldn't kill them.
Crippling them, that's another thing entirely...

 

[Megacherv]

As for Sony, maybe not bankrupt, they do make the occasional decent TV. Lose their gaming division? Yes, please...

Huh - that makes no sense at all. Why? If you neither own a PS3 or plan on purchasing one why does it's mere existence bother you so much?

For anybody reading your posts it looks like you are one of those people that needs to validate their own purchases and lifestyle choices by trashing those of others. Don't worry about this though - it's quite common for people to do this; it's a crutch that helps them feel like they belong.

As I stated before, I DO own a PS3, just that I never gave Sony any money for it.
And yes, the fact that the PS3 exists does bother me, it's a sign of deeper problems within the game industry(not the PS3 hardware itself, but the way it's being marketed and supported).

As for me needing to validate my own purchases, well...that would only be the case if I felt that my purchases needed any validation, wouldn't it?
As it stands, I don't feel that they do, especially from random people on the internet
If I ever feel the need to buy a 20ft golden statue of Xenu, you better believe I will do just that.

Please, I'm asking kindly, just leave the thread

I know your points may be valid, but seriously, we have a serious issue on our hands here. If SCE gets totally fucked over by this, it's going to massively shake up the industry. Worst case scenario, if this totally destroys PSN:-

-No PSN means that indie devs that previously released onto the PSN now have to stick to the PC or move to XBL which has been known to not treat indie devs that well, meaning a decline in indie developer growth and recognition

-The only main competitor for hardcore gaming consoles will be the 360, and to be fair that's not going to be a good thing.

-No more PSN also means that owners out there of PS3s and (possibly) only PS3s are buggered, since that means no more games released for PS3, no more PSN, no more support for anything.

We just ask for peace right now, not debate

 

[Kosnark]

I'm in bed with the "let them burn" people. Also it is hard to care about so many people losing jobs when so many are already sitting there. I don't see why sony's employees are so much more valuable than all the other people who lost there jobs. Where were the white knights defending the "innocent people who didn't do anything" group before.I own a ps3 I'll part with it if it proves that treating people the way the PS3 division has and treating ownership in such a way that I have to be told what I can and can not do with my property is wrong and will cost you. I do feel sorry for people affected if anyone incurs any financial loss due to sony's incompetence but hopefully repairing that damage will hurt sony more. Also does anyone find it interesting that they tried to claim they are not responsible for loss of information in the EULA then demanding personal information?

 

[JDKJ]

Your forgetting that many of these "losses" aren't actual out-of-pocket losses. They're touchy-feely losses like "diminished customer trust and confidence"churn and "the extrapolated value of customer loss resulting from turnover or diminished acquisition rates" and "discounts for future products and services." Those aren't real world costs and therefore aren't paid out of by real world income -- not in the sense of being a debit on Sony's books.

Moreover, the OP's math is a fuzzy as fuzzy math can be. He only arrives at the $24 billion by multiply $300 per record by the 77 million total number of records in Sony's possession and subject to breach. But that assumes that each and every record in Sony's possession has been breached. At this point and on the known facts, that $25 billion figure is about as accurate as any other number I randomly pulled outta my ass.

Fair enough and that's why I mentioned sensationalism at the end of my post. Even if it wasn't sensationalist reporting, it would be unlikely that Sony would have to pay that much in the end.

However, my main goal was to argue against the idea that Sony could weather a 24 billion dollar loss much less easily. While Sony is a giant from our perspective, they are not THAT big. Frankly, I'm not sure that Microsoft could weather a 24.5 billion dollar loss. Microsoft's anti-trust settlement in 2003 was, by way of comparison, 2.6 billion and that was considered to be a large hit against Microsoft.

So I stand by my closing statement. IF Sony did have to pay 24.5 billion, they'd be out of business.

How do we know they're not insured against significant parts of the $24 billion in losses? It's not uncommon for corporations to carry business interruption insurance. Or that they can't leverage existing assets and revenue into long-term debt with which to cover immediate losses? Or that it doesn't have substantial cash assets? Your analysis is entirely based on Sony having to cover losses out of operating income. That's not necessarily the case. If they can cover the losses from other sources like insurance or debt and stay ahead of their losses, then $24 billion may not be that crippling.

And Apple could do so easily. As we speak, it's got $66 billion in cold, hard, liquid cash laying around.