Pardon my ingnorance if I am wrong with is , but isnt KvK already server versus server?
First, I do not think your idea of forced merger by the loss of just one battle would go down too well with players.
If they shut down too many servers and got rid of all the inactive players there might not be enough clans to accomodate the clans battles.
Many inactive towns still produce a useful source of resources.
If you want a fighting kingdom you might be better playing a game where there is no interaction between (servers?) those that are playing the same game but in another reality.
Even if you found a game like this, you would find the same kind of decline in player numbers as you do here.
Eventually players realise that attacking clans in your own kingdom makes it harder to win the KvK battles.
Players have been asking for mergers for a long time,they came up with Drakkars instead.
Presently having lots of servers seems to suit Plarium.
Even if they halved the number of servers it wouldnt necessarily drastically change things.
The game and players of the game have a shelf life,and it wouldnt take long for the need to halve them again and so on.
You may be a new player, its certainly your first post on the forum though this doesnt confirm the former.
If you were to investigate any kindom, including your own,you would find out that the majority of players who start the game,stop playing very soon afterwards.