The company revealed its PlayStation 4 console, which will succeed the PlayStation 3, at a flashy event in New York with game developers like Ubisoft and Activision Blizzard in attendance.
Sony said the console would be available for the holiday 2013 season. It did not immediately disclose pricing.
The console will be up against the next version of the industry-leading Xbox console, which is expected later this summer.
The controller on the new console dubbed "DualShock 4" will have a touch pad, Mark Cerny, lead system architect on PlayStation 4, said.
Sony purchased U.S. cloud-based gaming company Gaikai for $380 million in July. Using that technology, the new console will offer a cloud-gaming service, the company said.
The 8GB PlayStation 4, which has been in development for the last five years, can also instantly stream game content from the console to Sony's handheld PlayStation Vita through a feature called "Remote Play," the company said.
Sony has also revamped the user interface on the new console that keeps tabs on user preferences and added social networking features.
Sony's announcement comes amid industry speculation that Microsoft is set to unveil the successor to its Xbox 360 later this summer. The market-leading Xbox 360 beats the seven-year-old PlayStation 3's online network with features such as voice commands on interactive gaming and superior connectivity to smartphones and tablets.
Gaining a lead over Microsoft's Xbox and Nintendo Co Ltd's (7974.OS) new Wii U could help Sony revive an electronics business hurt by a dearth of hit gadgets, a collapse in TV sales and the convergence of consumer interest around tablets and smartphones built by rivals Apple Inc and Samsung Electronics Co Ltd.
Tablets and smartphones already account for around 10 percent of the $80 billion gaming market. Those mobile devices, analysts predict, will within a few years be as powerful as the current slew of game-only consoles.
After six years, Sony PlayStation sales are just shy of Xbox's 67 million installed base and well behind the 100 million units of Wii sold by Nintendo, according to analysts.