The rumours were true: Sony has unveiled the latest evolution of its flagship PlayStation gaming console during a rare media event today in New York.

With the PlayStation 4, Sony is focusing on an entertainment “ecosystem” where users can quickly download new content, link the device with their smartphones and watch their friends play.

"Our long-term vision is to reduce download times of digital titles to zero," Mark Cerny, the lead system architect for the PlayStation 4, said Wednesday.

The PlayStation 4 is the company’s first major new video game console since the PlayStation 3 was released in 2006.

Sony is in a battle to win back market share from Microsoft, whose Xbox 360 has crept ahead in recent years, and from Nintendo, whose Wii console leads the industry with 100 million sold.

Microsoft is expected to announce its own next-generation video game console in June at the E3 expo in Los Angeles.

Before Wednesday’s event, Sony had released three videos under the title "PlayStation Evolution," looking back at the history of the first three versions of the console, a move that may be designed to trigger nostalgia in gamers who have drifted away from the once ground-breaking device.

With the new Xbox not yet out, and Nintendo’s new Wii failing to excite the world of gamers, there may be space for Sony to regain the status it held for years as the industry leader. The PlayStation 3, which did double-duty as a gaming console and Blu-ray player, is now seven years old.

Sony will have to significantly outpace Microsoft in areas such as voice-command technology and connectivity to smartphones and tablets, as well as break new ground in other areas if it hopes to push ahead of Microsoft and chase down Nintendo.

All gaming companies are facing a shrinking market share as casual gamers turn to tablets and smartphones for their entertainment.

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Sony has lost money for the past four years as it fell behind rivals such as Apple Inc. and Samsung Electronics Co. in profitability and innovation.

  • To watch the second video, "PlayStation Evolution: The Next Big Thing," click here.
  • To watch the third video, "PlayStation Evolution: Next Generation," click here.