Sony Computer Entertainment Europe has been fined £250,000 for allowing customers' data to be accessed during a hack of its online gaming network.
But Sony said it will appeal the ruling, and noted it had been the "victim" of a serious criminal attack.
The PSN service was attacked in April 2011 and taken offline for about a month by the US-based hacker George Hotz.
The hackers were able to access customer details including addresses, birthdays, credit card numbers, phone numbers and other information.
Sony had already apologised for the hack and offered gamers free games in compensation, but the Information Commissioner's Office said that wasn't enough.
It criticised the gaming giant for lacking adequate security software, and said it was guilty of a "serious breach" of the Data Protection Act.
The breach was "one of the most serious ever reported" it said.
The hack could have been prevented if Sony had taken more care with its data, the ICO said.
David Smith, deputy commissioner and director of Data Protection, said:
"If you are responsible for so many payment card details and log-in details then keeping that personal data secure has to be your priority. In this case that just didn't happen, and when the database was targeted - albeit in a determined criminal attack - the security measures in place were simply not good enough.
"There's no disguising that this is a business that should have known better. It is a company that trades on its technical expertise, and there's no doubt in my mind that they had access to both the technical knowledge and the resources to keep this information safe."
Smith said that one positive from the attack might be that customers would learn to be more careful with regard to whom they give their data.
But Sony said in a statement that it was planning to appeal.
"Sony Computer Entertainment Europe strongly disagrees with the ICO’s ruling and is planning an appeal," it said.
"Criminal attacks on electronic networks are a real and growing aspect of 21st century life and Sony continually works to strengthen our systems, building in multiple layers of defence and working to make our networks safe, secure and resilient. The reliability of our network services and the security of our consumers’ information are of the utmost importance to us, and we are appreciative that our network services are used by even more people around the world today than at the time of the criminal attack."