The name "PlayStation" for Sony's new gaming platform was chosen to contrast with the word "workstation," differentiating "computers for work" and "computers for play." Concerning the novel combination of computers and entertainment with 3D-CG, Kutaragi himself explained that "we really wanted to make a computer meant solely for entertainment and create the wholly new and unprecedented market of 'computer entertainment.'"

As the development team around Kutaragi prepared to start work on the project in earnest, they set up the "Computer Entertainment Business Preparations Room" in the Shin Aoyama building in Tokyo's Aoyama neighborhood. Engineers from Sony came to join the project, as well as Epic/Sony founder Shigeo Maruyama from Sony Music Entertainment (SMEJ).

One significant barrier had to be overcome at the very start, however. Since Sony didn't have any video game software titles of its own, creating these titles for the PlayStation would have to be left to third-party developers. In stark contrast to its competitors who already had an established catalogue of titles, the PlayStation was incapable of launching a whole new format on its own. At the project's outset, both Kutaragi and Maruyama traveled all across the country to negotiate with various developers, but responses were far from enthusiastic. If anything, their words were more often met with disbelieving looks, clearly reflecting doubts that what they were proposing was even possible in the first place.

This all changed in October 1993.

As a joint venture between Sony and Sony Music Entertainment (SMEJ), the two companies announced on October 27 that they would together launch a new company, Sony Computer Entertainment (SCE), in November of that year. The new company would develop and sell both home video game consoles and its respective software, while also managing licenses with external developers. Their stated purpose was to differentiate themselves from other video game companies by implementing high-quality 3D-CG on par with the most powerful graphics workstation computers of the day, thereby creating an entirely new kind of computer entertainment.

The next day, on the 28th, a tech demonstration on the new PlayStation aimed at third-party developers was held in hall 10 of the Sony Headquarters building.
The stars of the show were four prototype devices containing countless electronic components hardwired together. Ohga stood before the many software developers who had gathered from all across the country and delivered a welcome address, beckoning to them, "Our new company could never succeed if we decided to concentrate purely on software or hardware. We want to use the technological prowess we've built up so far to transform the very forefront of the world of gaming consoles. I ask you all to come see what we can make happen together."

Once Ohga concluded his speech, a tech demo combining all of the development team's efforts began playing, first displaying spheres, cubes, and other 3D shapes properly rendered with shadows, and ending with a large 3D model of the T. rex. The dinosaur model was brought to life with rendering down to its skin, and responded to controller inputs to walk, roar, and glare. Venue attendees were stunned, standing both motionless and speechless as they gazed at the screen. Calls from developers all over came flooding in the next day: the tech demo was a smashing success.

As more and more developers were invited to create games for the PlayStation, efforts were constantly made to create an environment for engineers and developers working with the PlayStation to maximize their expressive creativity in their work: the PS Library was a collection of basic fundamental programs offered to developers with no experience working with 3D-CG, and a sample codebase was created to assist with programming. Through these efforts, a steady stream of third-party games was secured for the PlayStation's future.

SCE was officially founded on November 16, 1993. Ozawa, then-Chairman of SMEJ, would become the company's first President; Teruhisa Tokunaka from Sony and Maruyama from Epic/Sony would become Vice Presidents.
Kutaragi, now a company Director, provided his outlook for the company by predicting that "if the last ten years can be called the age of 2D-CG for video games, then the next ten years will surely be the age of real-time 3D-CG." Ozawa meanwhile asserted that "SCE will step into the world of video games backed by the hardware prowess of Sony and the software prowess of SMEJ, its two parent companies. Just as the CD's digital technology transformed the music market, we hope to transform the video game market with the PlayStation."