Disappointing, but not unexpected news. The Freedom business model failed to gain any traction, and the financial situation of the game became unsustainable.
In my opinion, the Freedom model's continued emphasis on selling subscriptions, and failing to grandfather in returning subscribers, were the major factors in the model's failure. Subscriptions had by that time already proven to be unsustainable (thus the switch to f2p), and the former subscribers who were willing to return and give the game another try were welcomed with locked characters and grayed-out enhancements, thereby losing them as customers.
There were other minor factors as well in my opinion, including an uncompelling, exclusive endgame in the Incarnate system, the erosion of the good-will of the community caused by Architect Entertainment, and the fact that the game is quite old and suffering from natural attrition, and though I would disagree, many have said the game hasn't aged very well (IMHO, the game looks and plays exceptionally well for a game of any age, let alone one designed 10 years ago!) The game's feeling of extreme repetition, even by MMO standards, was the game's number-one, perennial Achilles' Heel.
None of this changes the fact that City of Heroes, a game that ran for eight years, can only be called a great success. It's influence will live on in the features it gave to games like Guild Wars 2, The Secret World, and so many others. Never doubt that City of Heroes has been highly influential in this industry, and years after its closing, it will still be felt in the design of brand new games. We'll be able to say, "City of Heroes did it first!"
More to come.
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