Turning Negatives To Your Advantage

I know I tend to start a lot of posts like this, but there’s an old saying. Unfortunately this one I can’t repeat verbatim as this is a PG blog, so I will paraphrase it a little. “Stuff happens.” Stuff, of course, refers to all sorts of negative things that can pop up in your day to day life. And if stuff can happen in your daily life, stuff will certainly happen in your business life too. There’s no getting around it, it’s basically a law of the universe.

But that doesn’t have to be a bad thing. I mean, it will certainly be a bad thing at the time, but in most cases there will be a way you can turn it to your advantage. There’s another old saying, “When life gives you lemons, make lemonade.” Here’s an example.

In April 2011, individuals suspected to be members of the hacker group Anonymous launched an attack on Sony’s online network, including their Playstation Network (the online framework through which their line of video game consoles connect), the Sony Online Entertainment network (through which their online computer games operate), Qriocity (now known as Music Unlimited, Sony’s streaming music service), and much of Sony’s network of websites. During the attack, user data including personal data, login info, and credit card information was stolen from an older database stored on the network. Sony pulled down their entire online network as a result, affecting over 77 million registered accounts. This is to date the second largest data security breach in history. Fortunately, the data was encrypted and to date there have been no confirmed reports of any fraud resulting from the attack, but the damage was still done. Sony’s online network stayed down for over a month before service began to be restored, and their credibility and trust took a HUGE blow. It is generally considered bad writing to type in bold capital letters, but in this case, it is certainly warranted.

While those responsible for coding Sony’s network slaved away night and day making sure everything was locked down tight, their marketing and PR departments went into damage control mode. The result was the “Welcome Back” program, made available to those with existing accounts with Sony prior to the outage. Playstation 3 and Playstation Portable owners received a selection of free games. All Playstation Network account holders received a free month of Playstation Plus, Sony’s premium PSN service, with existing PS+ subscribers receiving an additional 30 days credited to their accounts. Qriocity subscribers received a free month. All users of Sony’s online services were also offered a free year of identity theft protection, as well as several other free gifts varying by region as a thank you for returning after the outage.

There’s no dancing around it. Sony lost a lot on this, and spent even more trying to make it up to their customers. But was this a case of a company throwing a bone to their consumers to try and make up for their mistakes, or a brilliant piece of strategic marketing, spun out of one of the worst data breaches in history?

Well to be honest, it’s a bit of both. The free games, gifts, and month of Qriocity to existing subscribers were certainly the former. But tucked away in all of the gifts thrown at existing account holders, is that free month of Playstation Plus.  And this is where the turn to a positive comes in to play.

To properly explain this, I will have to go into a little bit more detail on what exactly Playstation Plus is. While access to the Playstation Network and online functionality for all games that make use of it has always been free for owners of Sony’s Playstation 3 console, Playstation Plus is a premium subscription service that adds additional features. This includes a minimum of four free games every month, exclusive access to demos and betas, online cloud storage for game saves, automatic downloads of firmware updates and patches, as well as large discounts on content available on PSN’s store. The caveat is that in order to continue to enjoy these features, you must have an active subscription. If your PS+ account expires and you don’t renew it, your free games will be gated behind a renewal page, and your access to the cloud storage and automatic download features will be lost (though anything you’ve purchased at a discount is still yours).

By giving all PSN users a free month to try it out, Sony was using the outage as a way to push people towards its premium service. And it worked. While they have never released the exact subscription numbers, multiple Sony representatives stated that many users chose to pay for a subscription before their free month was up, in order to continue using it. Social networking sites were full of posts from people saying they were going to subscribe. While the $50 a year subscription fee from these users combined almost certainly doesn’t equal out to what the company ended up losing from the entire debacle, they managed to drive more users to one of their premium services, creating a larger income stream and at least helping to offset some of the financial damage done. There was definitely still money lost, but in the process Sony managed to push people to PS+, which as a subscription based service could conceivably act as a revenue stream for as long as the company remains in the gaming industry. And as sales of the PS3 have steadily increased year by year since its release, 13 million new PSN users have registered since the breach, a new handheld recently released, and the PS3’s successor in development, that could be a very long time. $50 a year from a few million PS+ subscribers is quite a lot of money. $50 million a year from a few million PS+ subscribers over a period of ten, twenty, or more years, with more users joining all the time? If there were a way to insert the noise a cash register makes when it opens into this post, I would be doing it here. That’s big money. A solid subscription based service can conceivably generate income forever.

This is a rather drastic (and long) example of turning a negative into a positive. As a self-employed self-starter building your Personal Independent Earnings, it is doubtful you will experience anything quite on this level. Sony is, after all, an international multi-billion dollar corporation. But the lesson learned here can be applied to all businesses great and small, be it your own start-up, or something on the level of Sony. In business, as in life, “stuff” will happen. Some of it little, some of it mind-numbingly catastrophic. The important thing is to keep cool, analyze the situation, and find a way to flip it to your advantage. If I can throw out one more old saying, “every dark cloud has a silver lining.” Find it, and you could find yourself in an even better position than you started in, with an even bigger piece of PIE.

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