Sony - A Crisis Management Case Study

Dylan Holbrook Case Study #2 – Crisis Management

On April 20, 2011, people around the world woke up, turned their Sony Playstation video game/entertainment console on, and received an unexpected message. The message stated, “An error has occurred. You have been signed out of Playstation Network.” Users in confusion continued to try to sign on for hours upon hours to no avail. There seemed to be no reason whatsoever to why the service would be down, so people figured why would Sony randomly shut it down? The Playstation Network is a digital service from Sony that provides online gaming, user-to-user connection around the world, media streaming, and other content for users to engage in. The Playstation Network is the core feature of the Playstation brand. In the continuously changing gaming business, users are at this point in time chiefly using the product for online purposes only. Without Playstation Network, Sony’s stronghold in the large and growing video game industry is in jeopardy.

The Playstation Network error message

The reality of the situation was that there was an external intrusion (hacker) that

stalled Sony for an astonishing 23 days. Personal details from approximately 77 million accounts were stolen and prevented users of Playstation consoles from using the online service; one of the largest data security breaches in history (Chung, 2011). The attack took place on April 17 through April 19, which forced Sony to shutdown the Playstation Network on April 20. Users for an entire week were up in arms in frustration and bewilderment. Websites and forums all around the web were crammed with people showing complete infuriation with Sony. People said such statements about how they felt disowned in their loyalty to the Sony brand, made videos screaming hate towards Sony, and caused a massive uproar in the vast online community. They wanted answers.

Thousands of people posted aggravated responses on YouTube

Sony finally announced on April 26 that they shut the service down due to their

knowledge that user details could have been obtained in a security breach. They also stated

that they were not able to conclude whether credit card information was given out or not. The public was immediately angry that Sony found the situation severe enough to completely shut down their Playstation Network service, but not subsequently warn them of possible data theft until a week later. After that announcement to the public, Sony started to do all they could to try to fix the online service. Days continued to go by as people still had no idea what was going on with their personal information, credit cards, and whether they would be safe. Sony could not make any progress in solving the case and on May 4 revealed the addition of multiple companies to their investigation team. The combined team believed that a hacker group titled “Anonymous” could be behind the breach (Bartz and Finkle, 2011). Anonymous is an international online group known for their hacking of many media outlets in the past such as Wikipedia, Encyclopedia Dramatica, and multiple top entertainment forums. Using the Guy Fawkes masks popularized by the film V for Vendetta, their presence had been recognized as a mysterious yet anarchic group to the world.

Individuals dressed up as Anonymous with Guy Fawkes masks in public

Anonymous immediately refused any involvement in the breach and on May 6, Sony

stated they had begun the “final stage of internal testing” which had to be rebuilt from the ground up. Hate towards Sony was at an all time high. Long time users of their products were persistently moving to their competitors and the company’s reliability levels were now through the floor. A whole nine days later on May 15, the rebuilt Playstation Network service was launched online on a country-by-country basis, starting with North America. Sony had a lot of catching up to do with regaining fan support.

To this day, no one’s credit card or identity was directly harmed by the network intrusion. During the crisis, Sony was worried about the personal details of 2,500 people stolen by hackers and posted on a website, which they quickly removed before any damage was caused (Reynolds and Fahmy, 2011). Two large publics were crucial in their concern. One being the adult customers who were the ones purchasing with credit cards and using personal information on their service. The second public was the younger gamers who have loved their products and felt betrayed. They are the ones who were voicing their distasteful opinions the most during the crisis, posting tons of videos and comments on YouTube, forums, and many other sites in frustration. Sony wanted desperately to communicate their trust and support back, so they really started to accept their own mistakes and move on in making things right for their millions of devoted supporters.

Sony spent $171 million to technologically fix and search for permanent system recovery for the Playstation Network outage (Hachman, 2011). The U.S. House of Representatives contacted Kazuo Hirai, Chairman of the Board of Directors of Sony Computer Entertainment America, who responded to questioning about the large-scale, criminal cyber attack and how they felt they handled it. There were four key principles with Hirai’s response to the government: 1. Act with care and caution, 2. Provide relevant

information to the public when it has been verified, 3. Take responsibility for our obligations to our customers, and 4. Work with law enforcement authorities. It is safe to say that Hirai and his staff did not effectively communicate these values with the public during the crisis.

The Sony Board of Directors bowing in respect during government-based media coverage

The main media strategy employed by Sony during the crisis was through the

Playstation Blog, which is linked to Twitter and a significant component of the Playstation website. On April 26, Sony Sr. Director of Corporate Communications and Social Media Patrick Seybold attempted to give a fair explanation of the delays:

“There’s a difference in timing between when we identified there was an intrusion and when we learned of consumers’ data being compromised. We learned there was an intrusion April 19th and subsequently shut the services down. We then brought in outside experts to help us learn how the intrusion occurred and to conduct an investigation to determine the nature and scope of the incident. It was necessary to conduct several days of forensic analysis, and it took our experts until yesterday to understand the scope of the breach. We then shared that information with our consumers and announced it publicly this afternoon.” (Seybold, 2011)

Sony on April 26 also sent out e-mails to users to suggest safeguarding credit card transactions by checking bank statements, again nearly a week after the initial network intrusion.

Playstation Blog was a crucial communication method throughout the crisis

Compensation was a key method that Sony wanted to capitalize on to give users their

appreciation for dealing with the crisis. They announced a “Welcome Back” program at a Tokyo press conference a few days before the network was completely restored. The program

promised to include 30 days free membership of Playstation Plus, which is a premium service that provides users with additional bonus content such as free movies, trials, photos, and arcade games. Existing Playstation Plus members received an additional 30 days added to their subscription. Sony also offered one-year free identity theft protection for any user who was possibly affected by the intrusion. At the end of the press conference, they stated that there will also be “selected Playstation entertainment content” given to users, though people were doubtful in thinking there would be any worthwhile content that would possibly be given out for free. On May 16, Sony went above and beyond expectations and announced that two Playstation 3 games and two Playstation Portable (their portable gaming system) games would be offered for free from lists of five top-selling games. Titles included award winning LittleBigPlanet, InFamous, ModNation Racers, and Killzone Liberation among others. The announcement was surprising but certainly satisfying for players since they could choose from a great list of titles in case they already had owned any of them. On the contrary, the government reacted much differently towards Sony during this time. US Senator Richard Blumenthal of Connecticut demanded full answers about the breach by emailing Sony Computer Entertainment America CEO Jack Tretton. Senator Blumenthal called for an investigation of the breach to be launched by the US Department of Justice to find whoever was responsible for the breach and to determine if Sony was liable for the way they handled the situation.

Sony’s Welcome Back program expressed gratitude to users who experienced the crisis

The perpetrators have never been identified to this day, though the hacker group

Anonymous who stated they had nothing to do with the case has posted a few skeptical claims since then. One cryptic message deciphered of the group states the following:

“We Would Like To Formally Ask You A Very Simple Question To All The Out Raged PSN Users. You All Do Realize Every Parody. Every Blog. Every Article. Every Comment Made On The Internet. In Turn Spreads The Anonymous Message. With Every Message You Preach You Offer To The Individual A Chance For Curiosity To Take Hold. Do You Realize They Are Just As Likely To Change Their View On Anonymous From Opposition To Support? You Are Strangling Yourselves With The Very Thing You Wish To See Destroyed. We Approve Of These Terms And Conditions And We Appreciate All The Help. We Are Anonymous. We Are Legion. We Do Not Forgive. We Do Not Forget. You Should Have Expected Us.” (Anonymous, 2011)

On top of this, Sony recently found a folder deep in their servers titled “We Are Legion”, the group’s motto. Maybe the answers will be solved in the future, but for now no one knows if Anonymous actually were the ones behind the network intrusion or if they are just using the crisis towards their advantage for publicity. Chris Clarke, co-founder and managing director of Epoch Public Relations thinks the crisis was extraordinary for Sony. He believes Sony’s track record is strong enough to emerge from many issues, however this issue could be different. Clarke stated the following in his intriguing take on the crisis:

"It would appear that one of the most damaging aspects of this recent incident is the way it’s been handled. I believe their reputation will suffer specifically amongst the video gaming community – especially gaming enthusiasts such as hardcore and pro gamers. One of the unique characteristics of the gaming community is that it’s global, classic Generation X, not especially brand loyal and very active in social media networks. Given the average age for a gamer is 35, people who have been playing since childhood the first arcade, console and home computer games continue playing now on current systems, they are more likely to be incensed and motivated to express their frustrations publicly." (Clarke, 2011)

It’s quite interesting how some elements of a crisis you would expect to be controllable and fixable end up being factors that Sony cannot erase from a person’s memory. Just the same as gamers remember days of their youth in the arcade, they will also remember this situation as a stain on the Sony brand. Even though the crisis is over, through the Internet there will always be reminders and recollections of the bad times through numerous types of media. Sony’s Playstation Network outage is a classic example how do both deal and not deal with a crisis effectively. At the 2011 Entertainment Expo (e3) in June, known as the largest event of the year in gaming, everyone was anticipating how Sony would do in their big press conference and whether they would do a well enough job apologizing live to the world watching. CEO Jack Tretton himself started the show off with a nicely timed, professional, and sincere apology to everyone, and pledged that Sony would not let it bother them and instead continue to provide the best the gaming and entertainment industry has to offer. On the other side of the coin, when Kazuo Hirai announced the completion of the re-fixed Playstation Network, the video was quite controversial. The video placed Hirai in a very nice office with smooth music playing in the background. A happy and unconcerned looking Hirai talked for over three minutes about how Sony now has top-of-the-line industry securities in place. Even though he finally thanked users for being patient at the end, the video acted more to try to enhance Playstation’s image instead of a transparent, heartfelt apology.

Jack Tretton at e3 2011 and Kazuo Hirai’s network restoration announcement

Sony got it right when it came to giving users a reason to come back to loving the Playstation brand. They provided great content and continued setting a great example throughout the year in continuing what they do without lingering on about what happened in the past. They did not do a phenomenal job during the crisis though, and I would recommend some suggestions for those unpleasant times. They should have been much more active in communicating to the public. Updates on what’s going on with the network should be daily and give a sense of confession to the people. Admitting your faults immediately instead of waiting nearly a week to reveal crucial information would have changed the perspective of Sony’s job handling the crisis dramatically. I would also suggest to Sony during that time to give their fans more of a feeling of importance to the company. Many irritated fans jumped ship to competitors during the crisis, and Sony really could have prevented that simply by letting those users know how much they care about them. The Playstation Network outage will always be an event that businesses can learn from by observing the good and bad customer relationship management tactics undergone by Sony in the setting of a major public relations crisis.

Bibliography: Chung, Emily. (2011, April 27) "PlayStation data breach deemed in 'top 5 ever' - Business - CBC News." Retrieved from http://www.cbc.ca/news/business/story/2011/04/27/technology-playstation-data-breach.html Bartz, Diane and Finkle, Jim. (2011, May 4) “Sony says Anonymous set stage for data theft | Reuters.” Retrieved from http://www.reuters.com/article/2011/05/04/us-sony-idUSTRE73R0Q320110504 Reynolds, Isabel and Fahmy, Miral. (2011, May 7) “Sony Removes Data Stolen By Hackers And Posted Online.” Retrieved from http://www.huffingtonpost.com/2011/05/07/sony-removes-data-stolen-hackers_n_858913.html Hachman, Mark. (2011, May 23) “PlayStation Hack to Cost Sony $171M; Quake Costs Far Higher | News & Opinion | PCMag.com.” Retrieved from http://www.pcmag.com/article2/0,2817,2385790,00.asp Seybold, Patrick. (2011, April 26) “Update on Playstation Network and Qriocity – Playstation Blog.” Retrieved from http://blog.us.playstation.com/2011/04/26/update-on-playstation-network-and-qriocity/ Lybio.net. n.d. “Anonymous – Message To PSN Users.” Retrieved from http://lybio.net/anonymous-message-to-psn-users/people/ Clarke, Chris. (2011, May 17) “Lessons From Sony’s PSN crisis.” Retrieved from http://themarketingbureau.co.nz/_blog/Stories/post/Lessons_From_Sony's_PSN_crisis/ Videos retrieved from youtube.com