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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.Sony posted a 456.7bn yen loss ($4.9billion) 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.
The new controller features a touchpad and a light so its movement can be tracked by a camera
There was also no mention of whether the console would support 4K - or ultra-high definition - video. However, Sony told the BBC 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.
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."
A successful launch might spur on sales of Sony's new televisions and other consumer electronics, helping turn around its fortunes.
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