From Software's notoriously punishing action-RPG Demon's Souls was published by Sony Computer Entertainment in Japan, but Sony's North American and European counterparts turned it down -- and now the company admits that was the wrong call. "That was a mistake," said Yeonkyung Kim of SCE Japan Studio during a localization session held at last week's Game Developers Conference. "It should have come out as a first-party title," he added, according to a 1UP report on the panel. Demon's Souls wasn't just published by Sony's Japanese division; the game was co-developed by SCE Japan Studio, an internal team that created the Patapon games and also contributed co-development to Level-5's White Knight Chronicles. Despite Sony's close relationship to the game's production, the company determined Demon's Souls was too demanding and unusual to connect with Western audiences. Atlus, known for localizing niche Japanese games in North America, acquired the publishing rights. Likely to Sony's surprise, Demon's Souls went on to receive exceptionally positive reviews, and strong sales for a lightly-marketed game, selling more than 150,000 units in its first month alone. Kim used Demon's Souls as an example of how the process of making localization decisions has yet to be perfected. Despite Sony's 15 years of experience publishing video games worldwide, the company still has more to learn.