Japan Studios co-developed with From Software... So it's pretty much first party. 

Like seriously yo does anyone actually know what a first party game is anymore?  Studios that are owned by the consoles company, now with Demons Souls Sony Japan helped out a bit but the main company was From Software, its their IP, it;s referenced in other games THEY'VE made, and it's got the From Software feel.  And From Software has put out pretty good games on every console this gen so yeah they're leading the way for everyone

From software doesn't own the IP, sony does. Its a similar situation to Team ninja making metroid other M.

I've had a thought about this the other day.

This generation, I've seen Sony raising its bar more and more, game quality wise.  And provided me with games of such quality that I've concluded that their games have reached the quality of Nintendo's.

Something that seems to be great for third parties too, is that Sony doesn't just offer to publish their games if they opt for exclusivity.  They also lend their own technicians, knowledge and financial support to help second parties achieve their goals.

And to clarify the confusion: Demon's Souls is a second party game.

Metroid: Other M and Halo Reach are not first party games.

They helped, but it was primarily developed by From Software. It is not 1st party

I agree.

At least we have concurrence on that  

Second-party developer

A second party developer is a company that is contracted by a first-party developer to make their games.

Then why did Sony not publish it in Europe?

It's a 1st party IP. But it isn't a 1st party game. No matter how you try to twist it a game made by a second or third party isn't 1st party