Sony chairman Howard Stringer has admitted that the electronics icon had taken a gamble with the high price of its new PlayStation 3 but predicted the console would still trump its rivals.
Stringer also expressed confidence that the next-generation Blu-ray high definition DVD technology, which Sony is pushing against a rival format, was winning over the heavyweight Hollywood movie studios.
Both the PlayStation 3 (PS3) and Blu-ray are seen as crucial to the future of Sony which has been steered back on track to recovery under Stringer, a former journalist who last year became the company's first foreign boss.
"The price of the PS3 is high ... but you're paying for (its) potential," Stringer told a press conference to mark his first year in office during which he unveiled a major overhaul of the group including 10,000 job cuts.
"Obviously, it's a higher-risk strategy as all new inventions are but if the PS3 lives up to its total potential, then I don't think anyone will be worried about Nintendo or Xbox's cheaper price," the Welsh-born executive said.
Last month, Sony set a price tag for the standard PlayStation 3 of 499 dollars in the United States and 62,790 yen (540 dollars) in Japan, far higher than rival Microsoft's Xbox 360 which starts at 299 dollars in the US.
Sony was forced to delay the launch of the latest version of the hugely popular PlayStation series by about six months until November, giving arch-rival Microsoft a one-year head start with the Xbox 360.
Sony also faces a challenge from Nintendo which plans to start selling its next-generation video game console, "Wii", later this year.
Meanwhile the inventor of the Walkman is going head-to-head in new high-definition DVDs against rival electronics makers led by Toshiba.
Stringer said film-makers, who could ultimately decide the outcome of the format war, were "beginning to sense, in Blu-ray, that the pendulum is swinging and swinging for a clear reason."
He said studios now increasingly realised they needed the higher memory capacity offered by Blu-ray which Sony is also using in the PlayStation 3 in the aim of making it a home entertainment centre.
"When you bring into new technology, do you go for a cheaper transitional (product), or do you take a chance on future-proof, higher technology which will keep you going for many, many years?" he asked.