My Ideas of what character is who in the game. (Spoilers)

[Chip]

I believe Amanda, Wooly, and the Opossum are all innocent and being forced to act against their will in the tapes. Just like every object which has eyes (who is a kidnapped kid).

I think Amanda is Rebecca .
Wooly is another child.
The Opossum is Jordan.
The main villain is the butcher. However, the avatar is not his true form. His real form is the realistic human who appears laughing when the screen glitches.

I also believe that the more the tapes are watched, the stronger Rebecca and the other children become. Eventually, they start breaking character, saying your name, and remembering their pasts. Which will really anger the demon of the tape.

Feel free to correct me if you think that I am wrong.

[Coloneljoe20]

Hmm... that explain why there is another demon than Amanda's demon. Also, I never thought the butcher is some kind of devil who has the power of poltergeist or breaking to other worlds of fiction and reality. That kind of devil maybe can shape shifting into human form

[Chip]

If you use the name of the butcher, Amanda is seen to be very scared of him.

https://www.youtube.com/watch?v=GygtzTpQ25A

In her nightmare, she dreams about him.
https://www.youtube.com/watch?v=vucFOrBiIlo

Additionally, during the broken tape, the mouth that keeps appearing during glitches appears over the butcher model, suggesting that the butcher may be the demon's avatar.
https://www.youtube.com/watch?v=vGUw2UddWQQ

To tell the truth, I am also guessing that we are dealing with a shapeshifting demon.

It is possible that the butcher was Hameln surgeon before becoming a demon. As some people pointed out that the surgeon and the butcher flashes kind of appear next to one another.

Also, I just wanted to add, some people think that Wooly is a demon, but there is a counter to that, first, Wooly does help Riley in the first game, and second Wooly is visible shaken and in fear if you ask for him to tell a horror story.

https://youtu.be/uxwECbmrNwU?t=224

Wooly flashs show pig mouths, fresh meat and a door: Maybe it is a trauma in a slaughter house.

So, Coloneljoe20, do you have some theories of your own?