What I meant by punishing wasn't necessarily the difficulty, but how one small mistake can reset an entire run back to square one, with the only things that carry over from playthrough to playthrough being the costume unlocks.
Couple that with how slow it is to start the game, I felt like I was wasting my time (In an hour and fifteen minutes of playing, I never got to the second night). And having to start over fresh each and every time after making a good amount of progress because I made a small mistake was crushing.
I love the concept, and the game plays VERY nicely, but that razor thin allowance for mistakes feels like a real downer IMO.