Sony: Pictures hack cost $15M; 2,100 smartphone job cuts coming

Last year’s massive hack on Sony Pictures Entertainment, which the U.S. administration has blamed on North Korea, cost the Sony division around $15 million.

In [company]Sony[/company]’s results (PDF) for the third quarter of its fiscal year (the fourth quarter of 2014 proper), the company had to provide forecasted rather than actual results for the movie unit, because the cyberattack so severely disrupted its network and infrastructure.

The Japanese company placed the cost for investigating and remediating the attack at approximately $15 million, a hit that it will place on its books for the current quarter. It said the impact on its full-year results “will not be material.”

The quarterly results also showed a year-on-year 28.7 percent boost in sales and operating revenue for Sony’s smartphone unit, and the division’s operating profit for the quarter was up 46 percent, reaching a modest $76 million.

However, the smartphone unit is still heading for a bigger-than-anticipated full-year operating loss of 215 billion yen ($1.83 billion), and Sony also reiterated its plan to cut a couple thousand jobs in its smartphone division — now more specifically laid out as 2,100 jobs — by the end of March 2016. Previous reports have indicated these job losses will mostly take place in China and Europe.

NSA’s North Korean insight reportedly helped attribute Sony hack

When the FBI formally accused North Korea of being behind the Sony Pictures hack, it was clear that it knew more than it were letting on about the evidence – it’s one thing to give anonymous briefings about the attack’s attribution, and another to officially name the attacker. Unsurprisingly, it turns out that the NSA played a major role in creating that confidence.

Apart from providing interesting context for the global digital arms race and noting how Chinese hacks on the U.S. Defense Department turned out to be awfully expensive, a Der Spiegel article over the weekend referenced a document (PDF) that described the “ramping up” of the NSA’s targeting of North Korea. The NSA has a clever “fourth party collection” strategy of tracking what other spies are doing and stealing what they find – in this case, it was South Korea spying on North Korea, and after a while the NSA decided to establish its own window into North Korean intelligence.

On Sunday the New York Times described these efforts in greater detail, citing anonymous officials and computer experts to assert that the NSA had penetrated the Chinese networks connecting North Korea with the rest of the world, and “picked through connections in Malaysia” that North Korean hackers use. This program apparently dates back to 2010 – long before the Sony Pictures kerfuffle.

However, despite this insight and the fact that North Korea had expressed anger at the upcoming release of “The Interview”, it seems the NSA failed to alert Sony Pictures about the incredibly damaging hack – internal documents were stolen and published, movies were leaked, executives were embarrassed – before it happened. Officials told the NYT that the NSA should have been able to spot the spear phishing that gave the attackers access to Sony’s networks, but “those attacks did not look unusual”.

According to the piece, South Korea reckons North Korea has around 6,000 hackers in its Reconnaissance General Bureau spy agency and Bureau 121 hacking unit, and a large hacking “outpost” in Shenyang, China. The Sony hack involved two months of planning, U.S. investigators later decided.

Earlier this month, FBI chief James Comey claimed that the North Koreans “got sloppy” in the Sony hack, failing to properly mask the North Korea-associated IP addresses from which their attack originated. According to the NYT piece, this same laxity manifested in a North Korean hack on South Korean banks and broadcasters back in 2013, which was traced back to Shenyang with the addresses falling “within a spectrum of IP addresses linked to North Korean companies.”

Sony: 2 million people have streamed The Interview

Over 2 million people have purchased or rented The Interview since it started streaming on December 24th, according to an announcement from Sony Pictures Entertainment (via Business Insider.)

The Interview raked in $15 million in online sales through Saturday night, which is five times larger than the $2.8 million weekend box office generated by the film’s limited release in 331 independent theaters.

The slapstick farce about North Korea starring James Franco and Seth Rogen is available from YouTube, Google Play, Xbox Video, and Sony’s own website. It costs $14.99 to buy and $5.99 to rent.

Apple also started selling The Interview on the iTunes store on Sunday. Its newfound availability on iTunes will make it easier for people with an Apple TV to watch the movie — previously, users had to purchase the movie on a computer or phone before watching it on their [company]Apple[/company] TV.

For a dumb comedy, The Interview has certainly had a tumultuous route to wide release. After a large cache of [company]Sony Pictures[/company] documents and emails was leaked, the movie had its release plans temporarily cancelled because of vague fears that North Korea could attack theaters in retribution for an unflattering portrayal of Kim Jong-un. Experts remain deeply divided about whether North Korea was involved with the Sony Pictures breach.

Because The Interview was officially released online before it opened in a limited number of theaters, many are closely watching its progress because it could be a bellwether for future “day and date” releases.

Last week, Variety reported that Netflix is “in talks” to stream The Interview, too.

follow-seth-rogan

The movie is still being promoted on social media. Twitter pushed a notification to its users on iOS and Android suggesting they follow Seth Rogen ahead of a planned live-tweeting of the film on Sunday.

 

 

The Interview tops YouTube’s list of popular videos

Getting hit by hackers who may or may not be from North Korea isn’t the worst way to drum up interest for a movie: “The Interview” is currently at the top of YouTube’s “Popular Right Now” list. A related video is third.

After initially canceling the December 25 release of “The Interview,” Sony backtracked and the film ended up showing in 331 U.S. theaters, according to Variety. That’s less than 10 percent of the locations at which the movie was originally slated to play. Only independent theaters showed the film after the large chains stuck to their original decision to drop the movie.

The film managed to hit the $1 million mark in theaters, but came in 15th for ticket sales on Christmas Day, Variety reported. A Sony statement said it sold out in some theaters.

So Sony’s decision to release the film online, where it is available for rent or purchase, was a smart one considering the interest in the movie after the hacking story received national attention. Sony’s anti-piracy measures, however, were not so smart. Variety estimates the film was illegally downloaded at least 900,000 times within 24 hours.

Interested in watching “The Interview” online? Here’s our guide to accessing it on your Apple TV, Roku, iPad or iPhone.

How to watch The Interview on Apple TV, Roku, iPad and iPhone

The Interview got a surprise online release Wednesday just in time for the holidays — but watching it on the device of your choice can be a challenge. Case in point: Google is releasing it for rent and purchase on both YouTube and Play in the U.S., but Apple is sitting on the sidelines, leaving Apple TV and iPad owners wondering what to do. And Microsoft is streaming it on its Xbox console — but how can you watch it on Roku’s streaming boxes?

For answers, check our guide below:

Apple TV

(Note: Five days after Sony began allowing online sales of The Interview, Apple agreed to offer the movie over iTunes. It is now available for rent and purchase on Apple TV.)

There doesn’t seem to be any way of buying or renting the film directly on Apple TV (if you’ve found a way, please let us know in the comments), but you can purchase it on YouTube Movies on the web from a PC or Mac and then stream it to your Apple TV, though you may have to go through a few configuration steps.

  • First, make sure that you have the right version of the YouTube app available to you. Only third-generation Apple TVs have the new YouTube app, which offers access to paid content. You won’t be able to access YouTube rentals if you have a first- or second-generation device. If you are unsure, check how the YouTube app looks like on your Apple TV, and compare it to the screenshots on this page.
  • If your Apple TV YouTube app isn’t linked to your YouTube or Google accounts, you’ll have to manually connect them by going into the sign-in option in the settings tab. You’ll get an 8-digit code, which you then enter on YouTube’s activation page. Your YouTube preferences should now show up in Apple TV.
  • You have to purchase or rent the movie from the YouTube or Google Play. If you’ve never bought anything from Google Play or YouTube before you’ll have to enter your credit card info, but if you already have a Google Wallet account, you’re set.
  • Now go to the Apple TV app, go to the MyYouTube tab, and then scroll down to the purchases section. Your movie should be right there.

iPhone and iPad

The process is much easier on iOS devices as long as you have the YouTube app or Google Play Movies & TV app. As with Apple TV you can’t buy The Interview directly from either app, but if you purchase it on the web from either Google Play or YouTube, you’ll find it available on either iOS app once logged in with your Google ID (In YouTube, you’ll see it under the purchases tab).

Roku

Roku owners can access the movie through the YouTube app, provided they have one of the current-generation Roku models that actually carries that app (check here for a complete list). As with Apple TV, you’ll have to rent or buy the movie online first, then make sure to link your accounts to sign in to the YouTube app on Roku. After that, your purchases and rentals should show up in the purchases section. Alternatively, you can also use the new Google Play Movies app on Roku.

This post was updated at 4:05pm with more information on accessing paid YouTube rentals on Apple TV.

Janko Roettgers contributed to this post.

The Interview is heading to YouTube, Google Play and Xbox today

The off-again, on-again saga around The Interview continues: Google and Microsoft have agreed to make the movie available online. The film becomes available on 12/24, starting at 10am PT on YouTube, Google Play as well as through Xbox Live and via Sony’s own website. Consumers will be able to rent the movie for $5.99, or buy a digital copy for $14.99.

Sony confirmed the release of the movie Wednesday, following a report from CNN that first mentioned ongoing negotiations between Sony and YouTube. The studio apparently plans to make the release available on Seetheinterview.com, which is inaccessible at the time of writing.

Sony had canceled all release plans for The Interview last week after major theater chains pulled out of the release following threats of violence and the devastating hack attack on Sony’s servers. At the time, Sony Entertainment CEO Michael Lynton said that there were no plans to release it online. This week, the film’s fate changed completely: The film will now debut in around 300 independent theaters on Christmas Day.

The online release apparently came together after Sony reached out to a variety of online platforms last Wednesday. Google’s Chief Legal Officer David Drummond published the following statement about it on the company’s blog:

“Last Wednesday Sony began contacting a number of companies, including Google, to ask if we’d be able to make their movie, “The Interview,” available online. We’d had a similar thought and were eager to help—though given everything that’s happened, the security implications were very much at the front of our minds.

Of course it was tempting to hope that something else would happen to ensure this movie saw the light of day. But after discussing all the issues, Sony and Google agreed that we could not sit on the sidelines and allow a handful of people to determine the limits of free speech in another country (however silly the content might be). “

Re/code’s Peter Kafka reported Wednesday that negotiations between Sony and Apple to add The Interview to iTunes on the same day apparently fell through. However, it’s still possible that Apple will get the movie later, or that other online distributors will get a piece of the action as well. And Variety added that Sony is talking to Netflix about carrying the movie as well.

Getting The Interview on the day it is released in theaters would be a major coup for Google; these kinds of same-day releases are called “day and date” releases in the industry, and have been very controversial in the past. Major theater chains have long resisted this idea, arguing that a simultaneous online release would harm their box office sales. But with the major chains out of the picture for The Interview, Sony may be free to pursue the online route — and it could possibly look for clues on how other movies might fare in the future.

This has been updated throughout with further information on the release.

The Interview will reportedly be screened on Christmas Day

The movie that Sony at first wouldn’t release, then claimed it wanted to release, may get released after all. The Dallas Morning News is reporting that Texas indie theater chain Alamo Drafthouse has gotten the go-ahead to screen The Interview on Christmas Day.

The Seth Rogan–James Franco comedy about the assassination of North Korean dictator Kim Jong-un was pulled from distribution last week after Sony became the target of a massive hacker attack tied to North Korea. Then it looked as if the movie would never see the light day of day, but since then Sony has said it would find some way of distributing the movie.

Since then there have been swarms of rumors and speculation about how and when the movie would be released. But Alamo Drafthouse founder Tim League confirmed to the News that Sony has “authorized shows for Christmas Day.” League added the Drafthouse “will have Dallas shows on sale within the hour.”

The Plaza Theater also stated on social media it will screen The Interview and began posting showtimes on its Facebook page. According to the Hollywood Reporter, Sony is telling theaters it plans on releasing the movie on video-on-demand as it debuts on the screen.

 

The fair use case to show The Interview if Sony will not

After Sony cravenly cancelled The Interview, people who had no interest in the comedy now want to see it — mostly so they can stick it to North Korea, whose threats caused the film to be cancelled in the first place. But where can they watch it?

Some options are already emerging. As the Wall Street Journal proposed, the U.S. government could release the film everywhere, including North Korea where dissidents already smuggle in movies via balloons and USB sticks. Under the Journal’s plan:

[A]n alternative would be for the U.S. government to buy the movie rights from Sony and release it into the public domain. Anyone could then share the file online without violating copyright, burn it onto DVDs or even re-edit it to make new viral videos. Chinese netizens love to mock Kim, and North Koreans like to watch movies smuggled across the border from China. Perhaps the CIA could dub the movie into Korean to make sure it gets to its target audience.

It’s not a bad idea, but perhaps there’s no need to wait for the U.S. government to buy the movie. Instead, distributors of any shape or size, from Netflix to film blogs, could rely on copyright’s fair use exemption to show the movie without asking [company]Sony[/company].

Law professor James Grimmelmann raised this idea last week:

Fair use rules involve courts balancing the rights of the copyright owner against the interest of the public. And in this case, the public interest case for showing the movie is enormous, given the awful precedent that this piece of censorship is setting. As David Carr of the New York Times put it:

Once the film was successfully censored, you could count the days until other films were affected. Actually, it happened earlier in the same day, before The Interview was shelved, when New Regency announced that it would drop an untitled thriller about North Korea that was to have starred Steve Carell. […]

The threats and subsequent cancellation will become a nightmare with a very long tail. Now that cultural discourse has become the subject of online blackmail, it is hard to imagine where it will end.

There is still the matter, though, of how fair use rules actually apply. Here, as with any other copyright case, it involves a standard test. The test involves four steps, but in practice, only two factors really matter: the reason someone is using the copyrighted work, and the effect that this use will have on the market.

As Grimmelmann notes above, the market factor tilts heavily in favor of anyone showing The Interview since, right now, there is no market for the film. And as for the other major fair use factor (known as “the purpose of the use”), there is a good argument that showing the film counts as a so-called transformative use. Unlike Sony’s original intention for the movie, which was as a lowbrow form of entertainment, others who show it would be making a powerful political statement. As President Obama noted on Friday:

“We cannot have a society in which some dictators someplace can start imposing censorship here in the United States … That’s not who we are. That’s not what America is about.”

Does this mean that the fair use case for showing The Interview is open-and-shut? No, it’s not. But the case is strong and, anyway, would Sony really double down by filing copyright lawsuits over a movie that it was too cowardly to release in the first place?

So let’s hope that everyone from [company]Netflix[/company] to [company]BitTorrent[/company] considers making a stand on this one. This would be a good occasion for the file-sharing crowd to prove that they care about something more than getting movies for free. And for [company]Hulu[/company] and [company]Amazon [/company]and anyone else with an interest in Hollywood, this would be a second chance to take up George Clooney’s call for the film industry to take a stand about something that matters more than money.

China slams cyberattacks after Sony job leads US to ask for help

The United States has asked China for help in blocking cyberattacks emanating from North Korea, officials told CNN and the New York Times in the wake of the attack on Sony Pictures that the U.S. administration has now pinned on North Korea. And now China has responded, albeit obliquely.

On Monday, the Chinese foreign ministry said the country “opposes any country or individual using other countries’ domestic facilities to conduct cyberattacks on third-party nations,” according to a Reuters report. Chinese Foreign Minister Wang Yi told U.S. Secretary of State John Kerry that “China opposes all forms of cyberattacks and cyber terrorism.” However, China said there was still no proof that North Korea had perpetrated the attack.

North Korea isn’t exactly a highly-connected nation — only a few high-level officials are allowed to access the global internet – but what access it does have mostly flows through Chinese networks. There have been reports that the attack on Sony Pictures emanated partly from China (though such attacks can be routed through proxy servers pretty much anywhere.)

North Korea itself released a statement over the weekend, denying involvement in the hack and saying “the U.S. should not pull up others for no reason.”

The colorfully-phrased statement included this:

It is a common sense that the method of cyber warfare is almost similar worldwide. Different sorts of hacking programs and codes are used in cyberspace. If somebody used U.S.-made hacking programs and codes and applied their instruction or encoding method, perhaps, the “wise” FBI, too, could not but admit that it would be hard to decisively assert that the attack was done by the U.S….

After all, the grounds cited by the FBI in its announcement were all based on obscure sci-tech data and false story and, accordingly, the announcement itself is another fabrication. This is the DPRK’s stand on the U.S. gangster-like behavior against it.

China, of course, has spent much of 2014 engaged in a war of words with the U.S. over hacking. It began in May, when the U.S. charged several Chinese officials over the alleged hacking of U.S. firms for economic espionage reasons, and since then China’s authorities have been generally making life hard for U.S. firms trying to do business there. China, which has enthusiastically pointed to Edward Snowden’s revelations about U.S. cyber-naughtiness, said in October that the country was “resolutely opposed” to hacking.

Act of vandalism, not war

The Sony Pictures hack saw the theft of reams of the company’s strategic and commercial information, as well as employees’ personal information and several unreleased films.

Although the motives of the “Guardians of Peace” hackers were initially unclear, speculation that the attack was related to the imminent release of a Seth Rogen comedy called The Interview crystallized over the last few weeks. After theaters were threatened with some kind of physical attack if they screened the movie, which features a plot to assassinate North Korean dictator Kim Jong-un, Sony cancelled its release.

Following criticism by U.S. President Barack Obama for pulling The Interview, Sony is now insisting that it will release it somehow. The file-sharing platform BitTorrent has offered its BitTorrent Bundles facility for the release, though Sony has yet to respond.

Obama described the attack as a “very costly, very expensive” act of cyber-vandalism rather than an act of war, but he said he is considering putting North Korea back on the U.S.’s list of sponsors of terrorism, as part of the official response.

Experts skeptical

However, despite the U.S. administration and the FBI finally having gone on the record in blaming North Korea, many in the security community remain deeply skeptical. Marc Rogers, principal security researcher at Cloudflare, wrote over the weekend that the evidence for that attribution – at least, the evidence that has been shown to the public — was weak.

The FBI said that there were great similarities in the attack code and methods between the Sony job and earlier attacks attributed to North Korea, but Rogers pointed out that the evidence for North Korea having been behind those earlier attacks was “flimsy and speculative at best.” He pointed out that many components of the malware were publicly available and easy to use, and noted that almost all the IP addresses used in the Sony attack were proxies that were again open to the public.

A message allegedly posted by the Guardians of Peace over the weekend accused the FBI of being idiots in concluding that North Korea was the culprit.

Meanwhile, south of the Korean DMZ there is concern over the safety of several nuclear power plants. Unidentified hackers have warned the Korea Hydro and Nuclear Power Co. that the reactors should be shut down or people should “stay away from them. The hackers stole equipment designs and manuals and posted them online. While the energy company has played down the threat to the plants’ safety, it is conducting drills to test defences against a cyberattack.

This article was updated at 2.55am PT to include North Korea’s statement and again at 3.10am PT to note China’s comments on the evidence.

Reports: US to confirm North Korea behind the Sony hack

After much speculation, the U.S. government will reportedly confirm soon, as early as Thursday, that North Korea was responsible for the massive hack against Sony Pictures Entertainment, according to multiple reports from CNN, NBC and The New York Times. According to NBC, unnamed U.S. officials said that while the attacks originated outside the reclusive nation, the hackers were operating under orders from the North Korean government.

The mega hack, which started on November 24, took down Sony’s email systems and resulted in the leak of five movies — including Annie and To Write Love on Her Arms — as well as employee social security numbers, medical records and salary information. Private emails between Sony officials were also leaked and generated a lot of embarrassing attention for Sony.

The hack sent Sony on a downward spiral as it dealt with the ramifications of having private emails and sensitive documents unleashed to the public. On Tuesday, Sony employees filed a class-action lawsuit against the company for not providing enough security around their data and not taking the appropriate measures to protect them once their data was known to be breached.

On Wednesday, [company]Sony[/company] officially cancelled the December 25 release of the action-comedy movie The Interview, starring Seth Rogan and James Franco. The movie centers around a pair of Americans who have been assigned to assassinate Kim Jong-un, North Korea’s dictator-leader.

The decision to stop the movie’s screening came in light of a hacker group taking credit for the attack and indicating that some sort of violence would occur at theaters that play the movie.

North Korea previously denied that it was involved with the hack, but also seemed to enjoy the devastation it caused, according to a report in The New York Times.

In early December, a North Korean government spokesman told the BBC in response to the hack allegations, “The hostile forces are relating everything to the DPRK (North Korea). I kindly advise you to just wait and see.”