A Sony logo is seen as customers look at Sony's digital cameras at an electronic shop in Tokyo. Credit: Reuters/Kim Kyung-Hoon
The Information Commissioner's Office (ICO) said the April 2011 cyberattack was "serious breach"
of Britain's data protection laws and fined the Japanese electronics giant £250,000 ($400,000, 300,000 euros).
Personal information including names, addresses, email addresses, dates of birth and account passwords were compromised, while customers' payment card details were also at risk.
The ICO said the breach was one of the most serious it had ever seen.
It found that the attack could have been prevented if Sony's software had been up to date, while technical developments also meant passwords were not secure.
"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," said ICO deputy commissioner David Smith.
"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.
"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.
"The case is one of the most serious ever reported to us."
Following the breach, Sony rebuilt its network platform to ensure the personal information it processes is kept secure.
The company intends to appeal against the decision.
"Sony Computer Entertainment Europe strongly disagrees with the ICO's ruling and is planning an appeal," a spokesman said.
The company said it noted that the ICO recognised that it was "the victim of 'a focused and determined criminal attack', that 'there is no evidence that encrypted payment card details were accessed', and that 'personal data is unlikely to have been used for fraudulent purposes'."
Sony added: "Criminal attacks on electronic networks are a real and growing aspect of 21st century life and Sony continually works to strengthen our systems."