Japan's Sony has apologised for a security breach that resulted in the theft of millions of users' personal data, offering compensation to disgruntled customers and promising to restore some of its PlayStation Network services this week.
REUTERS - Sony said it would resume some services on its PlayStation Network this week and offer incentives to customers to prevent them turning to competitors after the theft of personal information belonging to 78 million user accounts.
Top Sony executives apologised for the massive data breach at a news conference in Tokyo on Sunday, the first public comments from the Japanese electronics giant on the crisis since the PlayStation Network went down on April 19.
Sony repeated that credit card information could have been among the data stolen.
“We apologise deeply for causing great unease and trouble to our users,” Kazuo Hirai, Sony’s number 2 and the frontrunner to succeed CEO Howard Stringer, said before bowing deeply. Stringer was not at the news conference.
Many PlayStation users were angered by the fact that the first warning of one of the largest Internet security break-ins ever came a week after Sony had shut the network and hours after Hirai made an upbeat appearance at the unveiling of the company’s first tablet computers.
Sony said it would offer some free content, including 30 days of free membership to a premium service to existing users, to prevent customer flight.
Security had since been boosted on the company’s computer systems, Sony said, adding that enhanced levels of data protection and encryption would be implemented. The U.S. Federal Bureau of Investigation had been asked to probe the breach, Sony said.
Peppered with questions about accusations Sony was slow to inform users of the breach, a grim-faced Hirai said the company first wanted to know what kind of information had been stolen.
Hirai said he had known about the infiltration when he unveiled Sony’s first tablet computers on April 26.
“We made the announcement as soon as we could, which turned out to be the day after the launch,” said Hirai, Sony’s executive deputy president.
The breach could be a major setback for Sony. Although video game hardware and software sales have declined globally, the PlayStation Network is a key initiative for the electronics firm, bringing in an estimated $500 million in annual revenues.
Sony’s delay in announcing the theft could push some users to rival Nintendo’s Wii and Microsoft’s XBox gaming devices. Hirai said Sony could not yet assess the impact on earnings.
“This criminal act against our network had a significant impact not only on our consumers but our entire industry. These illegal attacks obviously highlight the widespread problem with cyber-security,” Hirai said in a separate statement.
“In addition, the organisation has worked around the clock to bring these services back on line and are doing so only after we had verified increased levels of security across our networks.”
The incident has sparked legal action and investigations by authorities in the United States and Europe, home to almost 90 percent of the users of the network, which enables gamers to download software and compete with other members.
Sony shares tumbled 4.5 percent on Thursday. Markets were closed on Friday.
Hirai needs to persuade users that the network is safe and investors that Sony’s strategy of exploiting synergies between hardware and content via online services, which he has expanded to include movies and music, is manageable.
He told the news conference that Sony would continue to build its network-related businesses as a key strategy for the company. Hirai was appointed to the No. 2 position in March after building up Sony’s networked services. [ID:nTOE729035]
Sony is the latest Japanese company to come under fire for not disclosing bad news quickly.
Tokyo Electric Power Co was criticized for how it handled the nuclear crisis after the March 11 earthquake. Last year, Toyota Motor Corp was slammed for being less than forthright about problems over a massive vehicle recall.