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Barkley said:
Now if this wasn't a visual novel there'd be no issue. A live-action film with the following description would be fine:

"A film that aims to raise social awareness of child and school related social issues through a story about four troubled heroines who, under unexpected circumstances, join forces with a young hapless teacher to fight against the evil forces that mean to exploit children."

Visual Novels (and to a lesser extent anime) just have a very seedy reputation in the west.

I think one of the problems might be that according to the character profile that same 'young hapeless teacher' they 'join forces with' has a 'severe lolita complex' and went as far as to 'install cameras in the school'. Lolita is literally a book about a pedophile praying on the titular heroine, so don't try to tell me that 'lolita complex' is anything else than a cute way of saying pedophile.

This discription reads like the discription for a harem manga (especially the 'young hapeless teacher' part) with a phychologocal loli twist. And the aesthetic they're using is leaning heavily on lolicon and harem tropes as well.

Now, that doesn't mean it has to be bad necessarily. This could be a brilliant and subversive visual novel that uses the sexualization of it's young characters in a revolutionary and smart way, but seeing that valve played the game and deemed the primary audience to be pedophiles, I doubt it.

Ultimately, it's Valves call. They've seen and apparently actually played the game and decided that it is not the kind of content they want to distribute. They should by all means spend some actual manpower on curating the flow of shitty asset flips that comes their way every day and not only act upon absulute worst case scenarios imo, but that's still their prerogative.