* Sony to offer some free content to stop customers quitting
* Sony will offer compensation if customers suffer damage
* Executives apologise for causing "great unease"
* Sony says not yet able to assess impact on earnings from
* FBI asked to investigate breach, Sony says
(Adds comments, details)
By Isabel Reynolds
TOKYO, May 1 Sony said it would resume
some services on its PlayStation Network this week and offer
incentives to customers to try 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 senior management on the crisis.
"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 bowing deeply three times
during a lengthy news conference. Stringer was not at the event.
Many PlayStation users around the world had been angered by
the fact that the first warning of one of the largest Internet
security break-ins ever came a week after Sony detected a
problem with the network on April 19.
The warning that user credit card information might have
been stolen also came just hours after Sony unveiled its first
tablet computers at an event where executives made no mention of
the PlayStation breach.
Sunday's news sparked thousands of comments on the official
PlayStation fan page on Facebook, some of them from users who
said they would switch to Microsoft's Xbox Live games
Sony said it would offer some free content, including 30
days of free membership to a premium service to existing users
and in some regions pay credit card renewal fees.
It said compensation would only be paid if users suffered
damage. Sony did not elaborate except to say there was no
evidence that credit card details had actually been stolen. It
has confirmed the theft of names and addresses.
Since the breach, security has been boosted on Sony's
computer systems, the company 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.
"The negative impact on Sony is likely to be short-term, but
the industry as a whole will suffer a longer-term impact," said
Kazutaka Oshima, president of Rakuten Investment Management.
"I think it will impact Amazon and other e-commerce
businesses. Sony might have had some security problems but I
don't think they had a particularly big hole."
Peppered with questions about accusations Sony was slow to
inform users of the intrusion, a grim-faced Hirai said the
company first wanted to know what kind of information had been
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, which one analyst estimates brings in around $500 million
in annual revenues.
Hirai said Sony could not yet assess the impact on earnings,
but at this point saw no effect on the launch timing for its new
hand-held games device or its tablets.
"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
The incident has sparked legal action and investigations by
authorities in North America 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.
It is unclear whether Hirai's explanation will 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.
Hirai 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 spearheading the development of networked businesses.
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.
(Additional reporting by Taiga Uranaka, Chikako Mogi and Mari
Saito, Editing by Anshuman Daga, Nathan Layne and Dean Yates)