Sony Regrets Not Publishing Demon's Souls Outside Japan

In a recent interview with GameInformer, Sony's Worldwide studios president Shuhei Yoshida expressed regret over the company's decision to not publish From Software's action-RPG Demon's Souls outside Japan, and expressed some of the circumstances behind it:
I feel one of Sony's biggest software mistakes this generation was passing on publishing Demon's Souls in North America and Europe.

Absolutely! Tell me about it! 100 percent agree!

How did it happen? Was it as simple as this game wasn't going to sell? How involved were you?

In short, that's what happens to any game. Especially games made in Japan since the majority of them aren't relevant to markets outside of Japan. There are always processes between product development and marketing in U.S. and Europe. All things considered, it's part of the issue of making games in Japan. The game development in Japan typically is made horizontally where all assets are made in parallel, so it's difficult to figure out what the final state of the game is going to be.

The western style game development is typically a vertical slice. So in the very early process, the team tried to create a small piece of the experience that resembles the final product. What happened with Demon's Souls was until very late in the game's development, we were not able to play the game through. There were framerate issues and the network was not up and running. We underestimated the quality of the game and to be honest, the media in Japan did the same.

For my personal experience with Demon's Souls, when it was close to final I spent close to two hours playing it and after two hours I was still standing at the beginning at the game. I said, (This is crap. This is an unbelievably bad game.) So I put it aside.

Luckily, third party publishers, Atlus in North America and Namco in Europe [stepped in], and it really became a great hit outside of Japan.

We definitely dropped the ball from a publishing standpoint, including studio management side. We were not able to see the value of the product we were making.

Did you learn from that experience?

Game development is a tough process. We start and stop many games. Some get made to the finish, but we have to make decisions. I hope we won't make the same mistake again. I should have been more stubborn talking to marketing people here in North America and Europe.

Asked about whether the company plans to do something with the Demon's Souls IP, Yoshida remained non-committal, but didn't close any door either:
Sony owns the Demon's Souls IP. What are you going to do with it?

We never sell our IPs. Well, I should never say never, but it's not our business. Our business is to grow our IP and we love Demon's Souls. From Software is a very important business partner, so we'll see.

Ultimately, from my and I imagine From Software's own perspectives, working on multi-platform titles just makes more sense, so I can't see the developer going back to the Demon's Souls IP.