At a news conference at E3, Sony unveiled its plans for an online movie and TV show distribution service through its Playstation Network.
Playstation 3 users will be able to rent or buy movies or TV shows and download them to watch on the console, or transfer them to Sony's handheld Playstation Portable.
"One of the coolest parts of this new service and a huge differentiator from other services is that this content is portable," said Sony Computer Entertainment America president Jack Tretton.
"You can have it in your home, you can take it with you on the road, or both. It can be put on multiple devices at the same time."
On the hardware side, Sony said it planned to launch a Playstation 3 console with an 80GB hard drive in September for $US399, the same price as the current model with a 40GB hard drive.
The 40GB Playstation 3 retails for about $699 in Australia.
Sony plans to phase out the smaller hard drive console and make the 80GB version its mainstay model as it focuses on turning the Playstation 3 into a home entertainment hub capable of storing downloaded movies and games, it said.
The announcement comes after Microsoft this week cut the price of its best-selling Xbox 360 Pro model game console with a 20GB hard drive by $US50.
Microsoft also introduced a new Xbox 360 model with a 60GB hard drive.
Mr Tretton said the Playstation 3 was "well on its way" to reaching Sony's goal to sell 10 million units in the year to March.
The Japanese electronics and entertainment conglomerate also said it would launch its video game operations in South America this year as it aims to expand its game business outside established markets in North America, Europe and Japan.
The company is also on target to meet its goal of selling 15 million units of its PSP in Sony's business year ending March 31, 2009, Mr Tretton said.
In comparison, Nintendo aims to sell 25 million units of its Wii console and 28 million units of the DS portable game gear during the year.
With Kiyoshi Takenaka and Daisuke Wakabayashi for Reuters
