Sony has announced its next-generation gaming console - the PlayStation 4 - at an event in New York.
Its new hardware is designed to offer superior graphics as well as new social features including the sharing of recorded gameplay clips.
It will succeed the PlayStation 3, which went on sale in 2006 and has sold about 75 million units.
The PS4 will eventually compete against Microsoft's still-to-be-unveiled Xbox 360 successor and Nintendo's Wii U.
Sony also confirmed a range of big-name software for the machine including Bungie's upcoming "shared-world shooter" Destiny, which will include exclusive content for the PS4.
The developer's previous title, Halo, helped drive sales for the rival Xbox platform.
A successful launch might spur on sales of Sony's new televisions and other consumer electronics, helping turn around its fortunes.
Sony posted a 456.7bn yen loss ($4.9bn; £3.2bn) in its last financial year, marking the fourth year it ended in deficit.
But the firm has forecast a 20bn yen profit for the current financial year ending in March.
Sony said the console was "coming holiday 2013" suggesting it will go on sale in at least some countries in or around December.
It did not give any indication of its price nor did it show what the console would look like.
There was also no mention of whether the console would support 4K - or ultra-high definition - video. However, Sony said it would have more to say on this matter "at the appropriate moment".
Sony described the machine as being like a "supercharged" PC.
It runs off an x86-based CPU (central processing unit) - similar architecture to that found in most desktop computers - and an "enhanced" PC GPU (graphics processing unit). Both CPU and GPU are designed by the US firm Advanced Micro Devices (AMD).
It comes with the new DualShock 4 controller, which includes a touchpad, a "share button" and a lightbar, which allows a separate camera to track its movement.
"This is a complete controller upgrade with touch, share and better responsiveness," said Brian Blau, an analyst at the tech consultancy Gartner.
"The new controller is the key to a better PS4 experience. It has the ability to share content easily, and brings in a component of touch that allows even more ways to interact with games."
The console also includes new hardware dedicated to video compression to make it a more social device.
The new controller features a touchpad and a light so its movement can be tracked by a camera
Users will be able to pause a game, select a few minutes of recorded video of their most recent activity, and instruct the clip to be uploaded to a social network.
This will then occur in the background while they can return to their game. The firm said it wanted to make sharing video clips as common as it is today to share screenshots.
Another new feature is that gamers can let one of their friends connect to their machine and take control of their character to help if they have got stuck, or allow several friends to watch their live progress as spectators. This facility uses technology from Gaikai - a cloud-based service Sony acquired last year for $380m.
Gaikai's technology is also being used to allow PS4 games to be streamed and played via the PlayStation Vita handheld console, which may boost its sales.
Sony said it was also exploring the possibility of using its Gaikai unit to allow PlayStation 3 games to be played on the new machine as well as other devices.
However, at the moment PS3 games will not run on the new console.
"The decision to not make the PlayStation 4 backwards compatible is disappointing and means the 5.5 million plus people who own a PS3 in the UK will essentially have to start their gaming collection from scratch," said Alex Simmons, UK editor-in-chief of the gaming site IGN.
"PlayStation 3 games - and indeed PSone and PS2 games - will be available to download at some point, but most likely at an additional cost, which might turn consumers off."
Designed for developers
Sony invited developers on stage to preview some of the PS4 games being worked on.
They included Killzone Shadowfall - an addition to its bestselling Killzone science fiction first-person shooter series; the racing game Driveclub; superhero game Infamous: Second Son; and Diablo 3.
Developer Ubisoft also confirmed that its much-discussed title WatchDogs, which involves a hacker taking control of a smart city's systems, is indeed being developed for the PS4.
Jim Ryan, president of Sony Computer Entertainment Europe, said that his firm's shift to an x86-based processor would make it easier for other developers to create games for the platform.
"One of the fundamental design principles was to make the PlayStation 4 considerably easier to develop for than some of its predecessor platforms," he said.
"It is much more of a generic PC environment. It's not a bespoke development environment as was very much the case with the PlayStation 3.
"So it's something developers are aware of, are comfortable with and they don't have to relearn the rules."
Previously unseen footage from Bungie's big-budget title
Destiny was shown at Sony's event
While the graphics shown during the demonstrations were more advanced that those in current games for Nintendo's Wii U, Sony must also convince gamers to choose its platform over PC-based systems.
PCs will be capable of offering increasingly impressive visuals as the PS4 ages thanks to their ability to have their processors and other hardware upgraded.
US firm Valve, in particular, has been vocal about its ambition to bring PC-based gaming to living room TVs.
Even so, Stephen Totilo, editor of the gaming site Kotaku, was broadly impressed with what he had seen.
"The PS4 games we saw today don't look that much better than the best beauties on the PS3 - until you look for the smaller details," he said.
"It seems like you can see further into the distance in these games' worlds. More sparks fly, more smoke swirls.
"This is nice, but it has the feeling of the spectacle of visuals alone is reaching a point of diminishing returns.
"More impressive is how much more social the PS4 seems - to be able to capture video of what you play while you play and share that with people brings console gaming closer to the cutting edge of modern gaming on a PC.
"This system seems smarter and more connected - it doesn't seem like a dinosaur."
Sony did not announce how much it plans to charge - perhaps holding the news back for the E3 gaming conference in Los Angeles in June or a later announcement.
The PlayStation 3 was initially sold at a loss, so if that practice is repeated with the new model its launch may initially put fresh strain on the firm's finances.
Even so, one analyst suggested that Sony would be willing to take the pain to maximise early demand.
"Without the established user base and community of PS3 and PlayStation Network, Sony would be without a significant home entertainment foothold allowing it to connect many of its other consumer electronic devices, products and services," said Piers Harding-Rolls, head of games at IHS Screen Digest.
"Sony's next generation device is likely to take on more importance not less."
The Japanese firm's shares closed 1.8% lower in Tokyo trade following the announcement.
Developers say they can create more realistic looking in-game characters, making it easier to convey emotions
Learning from the PS3's mistakes
The PlayStation 2 was the most popular console of its generation
The PlayStation 2 was the most popular console of its generation
It launched ahead of Microsoft's Xbox and Nintendo's GameCube and trounced them in sales. Between 2001 and 2006 its market share ranged between 59% and 86%, according to IHS Screen Digest.
But the PS3 had a rougher ride.
Its $599 (£393) launch price was criticised as being too high and it suffered as a consequence of launching about a year after the Xbox 360 in the US and Japan.
A shortage of supplies meant Sony had to postpone the European and Australian launch by a further four months to March 2007.
Initial sales were slower than expected causing the firm to release a revised, cheaper model, which featured fewer USB ports and ditched a chip that had allowed compatibility with PS2 games.
Pitched against the Wii and Xbox 360, the PS3 only achieved a 24% share of sales in 2007, according to IHS.
By 2012 it had increased that figure to 43%, but overall the Wii proved the most successful model of its generation.
Ken Kutaragi - the so-called father of the PlayStation - was moved from his role as the boss of Sony's Computer Entertainment division shortly after the PS3's troubled launched.
His replacement was Kazuo Hirai whose success at helping turn the PS3's fortunes around saw him promoted to chief executive of Sony last year.
By Leo Kelion
The PlayStation meeting was a surprisingly top-level unveiling for a bit of pending consumer electronics.
We didn't get a price, we didn't get a firm date, we only saw a half-dozen games in action and most importantly, most surprisingly, we didn't actually see the device itself.
Instead the nearly two-and-a-half hour show was more about the pending console's philosophical approach to next-generation gaming.
Despite the lack of firm details, the ideas that Sony promises to build their PS4 upon are intriguing.
So much has changed since the PlayStation 3 was launched. In today's entertainment landscape gaming is ubiquitous and to keep up consoles need to embrace that.
It looks like the PS4 will do that through two key approaches: sharing and smart shopping.
Gamers on the PS4 will be able to tap a button to instantly share their gaming achievements, not just through messages, but with screenshots and videos of their gameplay.
The system will also detect your gaming habits and pre-load your console with the sorts of games it thinks you will like. If you like them you tap a button to buy them.
The PS4 seems to be promising to provide seamless, easy access to gaming and entertainment in a way that hopes to makes the console as ubiquitous as gaming has become.