My post from yesterday on SWTOR's "character transfer" program has gotten a fair amount of attention, including blockquotes at Tobold's and the MMO Melting Pot, who asks whether the game has shrunk by 90%. To be clear, I don't think the population numbers are that low - at least not yet.
We already knew that the game was down over a quarter of its population. Due to the game's pre-launch guild deployment program, those losses were very likely to cluster on the newly added servers in the launch rush, as launch guilds stayed put on the pre-launch servers they were placed on. As a result, losing 25% of players could leave more than 25% of servers with undesirably low populations. If players were disproportionately leaving servers that never filled up to begin with, and new players (like myself) were disproportionately choosing the most popular servers that remained, it is easy to see how a lot of servers wound up in trouble.
There are also some reasons beyond avoiding the M-word for PR reasons why transfers were used over mergers. With transfers, it's up to the player choosing to transfer to make sure that any characters they already have on the destination server do not push them over the cap. With a voluntary transfer in place of an involuntary merge, responsibility for loss of a name can also be pushed on the player who "asked". In principle, some of the servers that were flagged as origin servers could still be saved down the line, though I think it is more likely that the stragglers will end up merged on a server that has room for them once they're down to manageable numbers.
That said, the sheer numbers of servers in play, combined with the previous population trend and the abrupt talk of free to play do not bode well. We already knew that the game was going to an unlimited free trial model through level 15 - currently seen in WoW and Rift - and that in principle means they are laying the groundwork for non-subscription access to the servers.
Alternate Payment Model
One final thought - when I heard the news from E3, I immediately assumed paid mini-expansion based on some past rumors regarding a survey that EA circulated on this topic. It sounds like they denied this rumor in press interviews, and perhaps for good reason. This idea has been tried before and never goes over well in a subscription game, especially within its first year of release. However, perhaps there is a way to make mini-expansions more like DLC - as an alternative to the subscription rather than an add-on.
DLC has far greater acceptance amongst players in general and Bioware fans in particular. What if, by "free to play", we mean that regular paid mini-expansions come with enough game time - at a discount that offsets the cost of the content for subscribers - to allow most players to beat the content? If for some reason you aren't done and don't wish to subscribe in the interim, you'd be free to revisit the stuff when the next DLC arrives with more included game time. It would still be a subscription game and you would still need to offer value for that option, but there may be some middle ground/hybrid model that hasn't been done before and that might work with the kind of content Bioware is producing. Time will tell, I suppose.