Serious allegations have been made by Ken Balough (Ex-SEGA Brand Manager) who seems to be telling the truth in the following SEGA Forum Post about an emerging issue in which Sonic The Hedgehog 4: Episode III appears to be completely cancelled by Sega Of America.
Conversely to the quality of Sonic The Hedgehog 2 on mobile, developed in part by Christian Whitehead who claims Episode III’s development simply “fizzled out as things evolved”, Sonic The Hedgehog 4’s two existing episodic games released in 2010 (Episode I) and 2012 (Episode II) are not really known for being that high of quality.
That being said, critically everyone appreciated SEGA’s efforts to keep the blue blur alive. We certainly hope that this cancellation is not the last we hear about Sonic, and instead gives birth to something more worthwhile and impressive for the fans.
So far though, fans are taking this cancellation as pretty harsh and neglectful by SEGA towards their Sonic IP, with comparisons being made to Valve’s Half Life episodic content which also never came to exist in a timely fashion.