Sony has unveiled the PlayStation4 and given it technical features and a price – US$399 – to undercut Microsoft's rival Xbox One.

The company gave gamers a much-anticipated first look at the new console on Monday night at the Electronic Entertainment Expo, also known as E3, the world's largest video game exhibition in Los Angeles.

The PS4's black box design appeared similar to the Xbox One but was priced $100 cheaper and will let consumers use secondhand software, affording a wide choice of games.

The console, which will be available by the end of the year, does not need internet connection to be played or authenticated, a requirement of the Xbox One that has drawn criticism.

"Sony just won a lot of fans," said TechCrunch, signalling possible concern at Microsoft that the Xbox One, which will launch in 21 markets this autumn for $499 in the US (€499 in Europe and £429 in the UK) could lose out when its rival hits stores soon after.

"The gaming landscape is changing with new business models and new ways to play," Andrew House, president and CEO of Sony Computer Entertainment, told the trade show on the eve of its official launch on Tuesday.

The four-day event is expected to attract 40,000 people, showcase new titles and technology and establish trends in the US$65bn per year gaming industry.

Sony announced the new PlayStation in February but waited until Monday to unveil the actual machine, which turned out to be a rectangular black box.

Jack Tretton, president and CEO of Sony Computer Entertainment America, earned applause when he said the device would not restrict used game sales – a potential requirement of the Xbox One that has dismayed geeks.

Tretton also said the PlayStation's disc-based games would not need a regular online connection to be played or authenticated – in contrast to the Xbox which needs to be online once a day.

"If you enjoy playing single-player games offline, PS4 won't require to you check in online period and it won't stop working if you haven't authenticated in 24 hours."

Sony gave snippets of coming games including the steampunk thriller The Order: 1866, the superhero adventure InFamous: Second Son, the racing simulator Drive Club and the sci-fi Killzone: Shadow Fall. The company said it had more than 140 PS4 games in the works.

Microsoft is gambling that users will embrace cloud computing as the next level in gaming. Its new console, which succeeds Xbox 360, has a Kinect motion sensor for hands-free game playing and can simultaneously let users control their TV and chat via Skype. The company announced an Xbox One edition of Minecraft and a new Halo game due in 2014.

The video games publisher Electronic Arts hired the rapper Drake to present the next edition of its football simulator FIFA 14. The actor Aaron Paul, who plays Jesse Pinkman in Breaking Bad, introduced the game Need for Speed: Rivals, which will have a film version out next year.

Patrick Bach, a producer with Electronic Arts, drew gasps when he opened a screen to show 64 players engaged in a multiplayer match of the upcoming Battlefield 4.

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