According to the developer it was actually because the game was too big for the Dreamcast system to handle:
"Heroes of Might and Magic III was not canceled because the Dreamcast was discontinued or anything, but because it failed due to the technical limitations. The game was technically too big for the Dreamcast, and since 3DO / NewWorldComputing and thus Ubisoft only wanted to see it published as a 1:1 conversion on the Dreamcast, eventually a point was reached at which the Dreamcast was basically just technically overwhelmed."
Read the full thread at Dreamcast Talk here. Regardless, Heroes of Might and Magic III was once categorised as one of the most famous 'lost' Dreamcast games - of which there are many - but now, thanks to the awesome Dreamcast community, it is now available to sample (in beta form, that is).
This is down to the work of Dreamcast collector and YouTuber FatalistDC and Dreamcast expert Jan Baumgartner. We salute them both, naturally. After a small fundraiser (which was achieved, again due to the Dreamcast community), Heroes of Might and Magic III has been dumped online after 20 years in the wilderness. And you, dear reader, can download it and play it either in your actual Dreamcast console, or using an emulator. Unfortunatley, I'm unable to run the game myself through an emulator as I use an Apple Mac, and lxdream seems to have been abandoned (it doesn't run on Catalina); while ReDream doesn't recognise the GDI or CDI version. Maybe you'll have better luck.
Update: As the links previously featured in this article have since gone dead, please go to the Dreamcast Talk thread about this release to get all the latest links.
If I manage to get the game working, rest assured you'll get a post-mortem review very soon! Have you downloaded the game and played it? Have you got it to run in an emulator or on Dreamcast hardware? If so, what are your thoughts? Let us know in the comments or on Twitter.