Sony’s projected third quarter earnings suggest that a cyberattack back in November of 2014 will have a lower financial impact on the conglomerate than originally expected.
As of this writing, Sony was posed to announce a net profit of ¥31.91 billion ($269.54 million) for Quarter 3 in 2014, compared to a net profit of ¥27 billion a year earlier.
This is in spite of an attack that compromised the sensitive data of celebrities and Sony Pictures employees, leaked several movies online, and resulted in the cancellation of a movie’s release to theaters.
“We don’t expect leaks of unreleased films online or damage to our IT systems will cause a significant loss,” Kazuhiko Takeda, vice-president of Sony’s corporate planning department, told reporters. “We had insurance against cyber attacks and will be able to recover a significant portion of the costs.”
Although Sony Pictures asked regulators for an extension to file its third-quarter earnings, Sony stated that it only spent $15 million on investigation and remediation costs for the cyber attack in Quarter 3 of last year.
The entertainment company has since reported that the figure will increase to $35 million to reflect all remediation costs for the full fiscal year through March 31.
Ken Westin, a Senior Security Analyst for Tripwire, explains why the hack may not have been as damaging as originally expected.
“The Sony Pictures breach was more of an embarrassment to the business,” Westin said. “But unlike retail breaches, actual customers were not really affected. They were only forced to watch a movie from the comfort of their own homes instead of going to the theater to see it.”
Following a series of 9/11-style threats made by the attackers against American movie theaters, Sony decided to cancel the release of “The Interview,” a fictional movie in which a TV talk show host and his producer are asked to assassinate Kim Jong-Un, the Supreme Leader of the Democratic People’s Republic of Korea.
The movie has since earned a whopping $40 million in online sales, with its international release scheduled to roll out later this month.
Ultimately, Sony Pictures took a greater financial hit due to lower sales in home entertainment and theatrical revenues, which saw a parallel decrease in operating income, than it did as a result of the cyber attack.
In Westin’s mind, the impact of the cyber attack has to do with who was compromised by the breach and who was spared: “Employees and actors were affected by the cyber attack to the extent that their data was compromised, but no actual customers had their payment credentials stolen, which I think is a key reason for this particular incident not having a significant impact on Sony Pictures Entertainment’s bottom line.”
Sony is expected to announce a new business strategy later in February.