How PlayStation Network Works

Two different systems can connect to the PlayStation Network: Sony's home console, the PlayStation 3, and its handheld system, the PlayStation Portable. In 2012, that list will expand to include the PSP's follow-up, the PS Vita. When Sony launches a successor to the PlayStation 3 (PS3), it will be able to connect to PSN as well -- but for right now, the PS3 home console is the primary gateway to Sony's online service. The PS3 hardware includes a built-in 802.11b/g wireless adapter for connecting to a WiFi network and an Ethernet port for accepting a hardline broadband connection.

Connecting to the PlayStation Network on a PS3 is simple: The XrossMediaBar (XMB), the console's dashboard navigation system, provides access to network settings necessary for getting the system online. That process is as simple as connecting an Ethernet cord from a router to the PS3, or configuring the console to connect to a WiFi network. With Internet connectivity enabled, the second step is to navigate to the PSN section of the XMB and create a free account. This requires a valid e-mail address and a unique online ID of the user's choosing [source: PlayStation]. Once registered and logged into the PlayStation Network, users have access to everything we'll cover in the remainder of this topic: online gaming, friends lists, the PlayStation Store and PlayStation Home.

Connecting to PSN with a PlayStation Portable (PSP) follows a similar procedure, but the handheld system can only get online via a WiFi connection. Once connected to a wireless hotspot, the registration/login process works the same as it does on the home console. PSP users connected to PSN can play games wirelessly with friends and access the PlayStation Store, but not all content available for one platform is available on the other -- demos of PS3 games aren't playable on the PSP, for example [source: PlayStation].

Of course, not all PSP users have access to a WiFi connection, so Sony created a way for gamers to download content to a computer and move it over to the PlayStation Portable. Sony's Media Go program for Windows is an organizational tool for music, movies, game downloads and other media gamers may wish to move from their computers to their PSPs. And the PlayStation Network is accessible via the Web, too, at Sony's Website. PlayStation owners who prefer to shop online -- or don't want to go through the registration process using a game controller -- can register online and go shopping on the PlayStation Store on the Web. This makes the PlayStation Store convenient to access, but it's no substitute for PSN's most important feature on the PS3: playing games online.

If the PlayStation Network existed only as an online marketplace in the form of the PlayStation Store, Sony never could have come close to rivaling the success of Microsoft's Xbox Live. Online gaming forms the backbone of PSN, and all of its other features radiate out from that all-important starting point. Online gaming on PSN is completely free -- and ever since Sony released its landmark firmware update (2.4) in mid-2008, the XMB has been available in all PlayStation 3 games at the press of the PlayStation button on the controller [source: PlayStation Blog]. That was a big deal for PSN gaming, because for the first time it meant gamers could easily switch between games, view their friends lists, and send text messages to those friends. For most people, playing games online is about playing with friends. Before that update, keeping in touch with other PS3 users wasn't exactly easy.

Sony has consistently made PSN gaming more accessible, but the actual gaming experience has more to do with the game itself than Sony's network. For example, certain PS3 games -- often first-party games published by Sony, like "Warhawk" and "M.A.G." -- provide players with dedicated servers that host online games. Most of the time, however, game developers do not provide dedicated servers but instead use a networking infrastructure that chooses a certain player's connection to host the game. This can introduce a discrepancy between players in an online gaming match -- essentially the host console is The Boss. Players far away from the host or players on a slow connection may experience high latency, leading to lag in their games. The host console will never experience these effects, which sometimes can lead to a host advantage [source: Bungie]. The vast majority of online games on consoles use this technology, but but the effectiveness of the "netcode" varies from game to game.

Sony added another major feature with firmware update 2.4 that emulated one of Xbox Live's most popular concepts. Sony launched Trophies, the PlayStation counterpart to Xbox Achievements, which reward players for certain in-game activities. Finishing a game on a high-difficulty setting, scoring a certain number of kills in online multiplayer and other achievements unlock PlayStation Trophies gamers can show off to their friends or enjoy themselves as dedicated completionists. And that's the gist of gaming on PSN. Next up: Let's look at how to download and buy games, movies and other media from the PlayStation Store.

Sony and Microsoft have greatly expanded the online marketplaces of their respective consoles since 2006, adding in everything from movie and TV rentals to full game downloads and support for popular services like Netflix and Facebook. But don't let all those additions fool you: The PlayStation Store is still firmly focused on gaming. The store is accessible via the XMB -- logging in simply requires a PSN username and password. Sony divided the store into two primary categories: games and video. The games section is home to playable demos of upcoming or already released titles, add-ons that provide additional content for full retail releases, and smaller downloadable games available only through the PlayStation Store. That catalog of games also includes PSOne Classics, which date back to the original PlayStation console of the 1990s. These games can be purchased on PSN and transferred to a PSP system to be played on-the-go.

The store's game category does include some content that's merely game related, like themes for the PlayStation console and game videos and trailers. The rest of the non-gaming content lives in the videos section, which offers movies and TV shows in purchasable and rental form. PSN rentals work much like the rental services of Amazon Video on Demand and iTunes: A rental can be initiated for one month after purchase and is available for 24 hours once activated [source: PlayStation]. That gives renters 24 hours to finish a movie or TV episode (or watch it over and over again for an entire day, if they prefer). Content pricing varies based on several factors: video quality (SD or HD), whether it's recent release or back catalog item, and whether the content is a rental or a purchase. Movie rentals start at $2.99, while purchases can cost up to $20 for HD videos [source: PS3News]. Words of warning: Videos purchased on a PS3 cannot be re-downloaded. Accidentally delete a movie or swap out hard drives without backing up data, and you're out of luck [source: PlayStation]. Finally, due to the complications of licensing agreements, the same content may not be available in all regions.

Obviously the PlayStation Store offers a whole lot of content for purchase. So how do you buy it? With Xbox Live, Microsoft opted to turn money into "Microsoft points" at the rate of 80 points per U.S. dollar. Sony opted for a simpler system. The PlayStation Network Wallet uses real dollar amounts, and funds can be added from a credit card. Sony also offers an Automatic Funding feature to draft money from a credit card if there aren't enough funds available in the Wallet. For gamers who don't own credit cards, Sony sells PSN cards in $10, $20 and $50 denominations in brick-and-mortar retail stores. These cards include voucher codes that credit an account with the corresponding amount of money [source: PlayStation].

That covers all the gaming goodness and multimedia available in the PlayStation Store, but it's not quite all of what Sony has to offer with the PlayStation Network. Up next are two specialty features: Sony's stab at a subscription service and a little virtual world called PlayStation Home.

Sony spent years after the release of the PlayStation 3 properly integrating PSN into the console experience. It was a necessary move to compete with Xbox Live, but Microsoft had an advantage: It was making $50 per year from each of its millions of subscribers. Sony's free PlayStation Network generated no such profits. Sony finally decided to change that by introducing PlayStation Plus, a subscription service for PSN users that costs $50 per year or $18 for three months [source: PlayStation]. Microsoft sells subscriptions to Xbox Live because it's required to play games online. Since gaming is still free on PSN, what does a PlayStation Plus membership offer?

PlayStation Plus subscribers gain access to a changing selection of free downloadable games that would normally cost money in the PlayStation Store. That includes games designed for PSN, smaller games called PlayStation minis playable on PS3 and PSP, and PSOne Classics. Some downloadable content is available, and Sony offers a selection of "Full Game Trials" that can be played for a limited amount of time. The free content changes every month, but the downloads remain playable as long as the PlayStation Plus subscription is active [source: PlayStation Blog]. Plus subscribers get discounts on certain games in addition to receiving free content, and Sony occasionally locks early access to certain content behind the PlayStation Plus gate. Plus subscribers get to play multiplayer betas and demos of select games before anyone else [source: PlayStation]. Finally, Sony offers a few exclusive features to its Plus subscribers: They're able to save game data to a 150GB cloud storage system and set the PS3 to automatically download some system updates and demos as soon as they're available.

PlayStation Home has one thing in common with PlayStation Plus: It's designed to make money. Home is Sony's version of "Second Life," a virtual environment for PSN users to hang out in as digital avatars. Socialization and customization form the linchpins of PlayStation Home -- gamers can deck out their avatars in virtual gear, customize their home inside Home with items unlocked from beating games or purchased from shops inside one of Home's public "Spaces" or locations. That's the driving force behind Home. The items purchased may be virtual, but the commerce itself is very real.

Sony and other companies sell items to users and Home's public spaces are full of advertising. Home encourages users to congregate and communicate with pre-programmed gestures or through typed out messages, and a variety of mini-games are playable within the virtual world. According to Sony, it's easy to make money in Home by selling virtual goods and advertising space [source: Venture Beat]. Of course, all that assumes one simple fact: The PlayStation Network is actually working. On April 20, 2011, hackers brought the PlayStation Network to its knees and crippled the entertainment giant's reputation.

To understand the hacking incident on the PlayStation 3, we have to look back quite a few months to an incident involving a hacker named George Hotz. Hotz hacked his way into Sony's console and made it possible to run custom firmware on the system. Sony's response? Remove a feature called OtherOS, which allowed PS3 users to install the Linux operating system on PlayStation 3s. Sony thought this made the system more secure, but in removing this feature it was taking away something it had advertised as a significant selling point for the system [source: Ars Technica]. Unsurprisingly, the hacking community didn't like that decision, as they believed they should have the right to customize hardware they've purchased.

Later, Hotz released the system's master key, making it easy to breach the system's security and run custom firmware or pirated games. Sony sued. An Internet group called Anonymous rallied against Sony, attacking its Web sites with denial-of-service attacks and lashing out against the company on the Web [source: Ars Technica]. Sony is obviously worried about video game piracy, but Hotz's defenders argue this is about freedom, not stealing games.

On April 11, 2011, Sony reached a settlement with George Hotz, who agreed not to hack the console again [source: Ars Technica]. But that wasn't the end of Sony's problem: About a week later, on April 20, 2011, Sony shut down PlayStation Network after detecting an external intrusion [source: PlayStation Blog]. PSN had been hacked. Sony was tight-lipped about the incident for several days until April 26, when it revealed that the hackers may have obtained the personal information of tens of millions of PSN users, including their names, home and e-mail addresses, dates of birth, passwords and login information, and potentially their credit card data [source: PlayStation Blog]. Sony's network stayed down for weeks as it performed a criminal investigation into the hacking incident and rebuilt its infrastructure to increase security.

A letter purportedly from the online group Anonymous claimed the decentralized organization wasn't responsible for the attack and that its leadership does not condone credit card theft. Sony claimed it found a file on its network titled Anonymous containing the text "We Are Legion" [source: Reisinger]. Anonymous obviously has a history of attacking Sony -- it was hitting Sony Websites with denial-of-service attacks even as the hacking incident occurred. Because of the group's decentralized nature, it's hard to say if the leadership truly was responsible or if splinter factions could have been operating independently. Sony received criticism from all sides during PSN's downtime. Had Sony been too slow to notify users that their personal information had been stolen? Was its network properly secured? The fallout from the PSN hacking incident will take months, or even years, to be fully realized.

PSN's hacking incident concerned the mainstream media once credit card information entered the picture. And then the United States government got involved: Sony was called before a House of Representatives hearing on "The Threat of Data Theft to American Consumers" [source: PlayStation Blog]. Sony detailed plans to reimburse its users for the damage and inconvenience of the PSN downtime with "complimentary identity theft protection to U.S. account holders and detailed the 'Welcome Back' program that includes free downloads, 30 days of free membership in the PlayStation Plus premium subscription service; 30 days of free service for Music Unlimited subscribers; and extending PlayStation Plus and Music Unlimited subscriptions for the number of days services were unavailable" [source: PlayStation Blog]. Finally, after nearly a month, PlayStation Network began coming back online in stages on May 14, 2011 with system update 3.61. PSN users were required to change their passwords when they logged onto the service for the first time since April 20, 2011.

Those weeks of downtime undoubtedly had far-reaching repercussions. In addition to shaking gamers' faith in Sony's security and making it impossible to play PS3 games online, the online blackout affected sales and brand strength. Several anticipated games that relied on PSN services like "Portal 2" and "SOCOM 4" were crippled. And with many console games being released simultaneously on multiple platforms, some users opted to purchase the Xbox 360 versions, knowing Microsoft's online multiplayer gaming was readily available.

Smaller game developers who relied on the sales of downloable games saw absolutely no income from PSN for nearly a month. Game studio Capcom claimed the downtime had cost it hundreds of thousands if not millions of dollars [source: Capcom]. It's impossible to know the exact ramifications of the hacking incident until Sony discovers who's responsible or gives up the investigation. Sony likely won't reveal how much money it spent rebuilding PSN and investigating the intrusion, but the figure no doubt lies somewhere in the millions of dollars. And that's not counting the money it will spend reimbursing its users. Or the money it will lose going forward as a result of consumer mistrust. After the announcement that PSN user information, and possibly credit card data, had been stolen, Sony's stock fell from $30 to a closing of $27.58 on May 13, 2011 [source: Google Finance]. This incident will hardly spell the end of Sony's game business or foreshadow the PlayStation 3's failure, but it was a major blow for the company and will impact the world of gaming in the years to come.