Bloomberg's people said that he had a chance to win, but that he would be more likely to ensure a Trump victory. If it was Cruz vs Hillary, he'd have been in with a hop, skip and a jump.I think Bloomberg strongly considered a run this time, but realized he had zero chance to win.
The reason third parties don't prosper in the USA is manyfold, but I think the electoral college system is the primary reason. You can get a lot of votes in the US election and not get a single electoral vote. Like, 30%.