Due to the recent cyberattacks targeting Sony Pictures Entertainment, the movie studio could be facing costs of a total of tens of millions of dollars.
The massive hacking of the movie studio arm of Sony Corp. hobbled the company's operations and led to the leakage of sensitive data regarding its employees and the company's operations and upcoming movies.
While the amount will certainly be damaging for Sony Pictures, it will be far less compared to the $171 million in estimated costs incurred by Sony for a security breach that attacked the PlayStation Network back in 2011, as that particular attack involved customer information being compromised.
The major costs stemming from the cyberattack carried out by still unidentified hackers include the investigations into the incident, the replacement or repair of affected computers, and the development and implementation of security systems to avoid being exposed to such attacks in the future. The lost productivity in the studio, which occurred because Sony Pictures required employees to log off from their computers to prevent further damage, will also add to the costs.
The cyberattack on Sony Pictures is viewed as the worst of its kind that occurred to a company based in the United States. In addition, the reputation of Sony took a hit for apparently not implanting enough safety measures to prevent their data from being stolen.
"Usually, people get over it, but it does have a short-term effect," said Center for Strategic and International Studies senior fellow Jim Lewis, who also estimated that the costs incurred by Sony due to the cyberattack could reach $100 million.
Lewis, however, added that it usually takes more than six months after an incident to be able to determine the costs associated with a security breach.
Analysts from Macquarie Research estimated that the incident will have Sony take impairment charges worth $83 million, while former federal prosecutor for cyber crimes Mark Rasch thinks that the costs associated with the attack will reach $70 million.
Sony has so far refused to release an estimate on the costs that it will incur, stating that the impact to the company is still under assessment. However, losses within that range would not be as big as a financial burden to Sony, which has posted an operating profit for the fiscal year through March of $501 million.
Rasch, however, thinks that non-monetary effects such as the exposure of trade secrets will be much harder to quantify, as the hackers have released documents on the contracts and marketing strategies of Sony Pictures which competitors can take advantage of.
In addition, Hollywood actors, actresses and producers might think about choosing to work with other studios, believing that information related to them could be put at risk if they choose to work with Sony Pictures.
A source familiar with the incident said that while Sony has insurance that will cover the security breaches, cybersecurity insurance usually only reimburses a part of the costs incurred due to hack attacks.
The group that has claimed to be behind the security breach have posted online Sony movies that have not yet been released, including Annie.
