Sony Pictures’ move to scrap the theatrical release of The Interview, a comedy motion picture starring Seth Rogen, will cost the movie studio in an array of ways.
To start, reports suggest Sony spent US$80 million making the film, which is based on a plot to assassinate Kim Jong-Un, the leader of North Korea. But the cancelling of the film’s release will inflict a far deeper financial wound than just that sum.
Lost ticket sales are the tip of the financial iceberg about to hit the studio, experts suggest.
“The cost to Sony from new software and hardware, employee labor to clean up the mess, investigation, lost productivity, and reputational damage, just to name a few, is at least over a $100 million and growing daily,” Hemanshu Nigam, who founded cybersecurity firm SSP Blue, told Bloomberg News.
WATCH: Sony cancels release of The Interview
Sony took the unprecedented step of completely cancelling The Interview’s North American release on Wednesday following an online hack of the studio’s computer systems and threats of violence from a group linked to the isolated Asian country.
Shares in the movie studio’s parent, Sony Corp., dropped 9 per cent on the news.
Pirated movies
The hack, which dove deep into Sony’s computer network to steal social security numbers, e-mails, salary data and other sensitive information, has also led to films like Annie and Fury being leaked on file-sharing sites. Annie was set for release this week.
Experts at Macquarie Research suggested Sony could be forced to write off more than $80 million because of the loss of potential sales.
Sony is also facing lawsuits from former employees who allege the studio didn’t do enough to protect workers’ information.
‘Impossible to quantify’
In one lawsuit filed on Dec. 15 in U.S. District Court in Los Angeles, two former employees claim Sony knew its data security measures were inadequate and that the company suffered breaches twice before the November attack.
B. Riley & Co., another U.S.-based stock researcher, suggested big retailers likely won’t carry the movie because of the risk of lawsuits if they too were the target of a cyber-attack – making the movie’s eventual release even more uncertain.
“This is almost impossible to quantify,” Daniel Hill, a government and public relations specialist said in the Bloomberg report.
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