Only a few characters are known at this point, they are...
The Player: You play as him. The player and his friends (including Hatty) were sailing on a boat until they were shipwrecked on an island. They discover a theater run by cats. However, the player and his friends get captured and are forced to perform deadly plays in the theater. The player is a very emotional person, being happy then crying after a few seconds. The player rescues Hatty by the end of the narrative but finds out he is inanimate. The player escapes the island with some of his friends, but the ship may have sunk after a sudden wave. The player could have died. His fate is so far unknown.
Hatty Hattington: The Player's best (and most attractive) friend who was given a glowing red hat, and according to the narrator, "Ooh that's bad. Glowing red things are always bad." He seems to be the captain of the boat. Hatty later becomes corrupted by the hat and the gems he can make from the theater and becomes its owner, leading the cats. He does nothing but sit in his office among a pile of gems. In the end, Hatty did not pay attention or maintenance to the staff of the theatre, the cats, so they became very disorganised and angry. They rebelled and destroyed the theater. Hatty at this point seemed lifeless (like a doll) and did not respond to anyone around him. This is because of the conflict between the souls of the hat, and the trauma that Hatty has been through and has witnessed his friends go through, making him emotionally torn (Hence the constant stream of tears) and putting him in a catatonic state. The player brings him aboard the boat. His body can be seen sinking to the sea floor in the end while the boat sank, and then some event with the hat (glowing green at this point) which so far has no logical purpose.
Cat Guard: They are the cats who run the theater. They wear brown uniforms that resemble real life guards. They are taller than the player and are pretty fat. These cats can be seen everywhere in the theater and will speak to the player. Later, these cats tried to save Hatty, as the theatre can only be ran by somone wearing the hat and that cats cannot wear it, when the theater was being destroyed but failed. It is unknown what happened to them. They also will take golden yarn for "Weapon Tools"
Prisoners: Hatty has enslaved the rest of your friends and has made you compete, fight, and you and them must work together to survive the deadly performances for amusement. They are other prisoners locked up in the Gift Shop, which you can unlock for an increasing rate starting at 10 gems. They serve as customization for the Player.
Narrator: The Narrator talks to you throughout the game with many different phrases, such as "Milk, milk, lemonade, get that hat so you'll get paid" and "Don't get zapped by those things. Some people poop themselves and die. In that order!" He also narrates cutscenes, and apparently is the one controlling the cutscenes stick puppets. He also sings the "Buckle Your Pants" song and can be turned off in the settings menu.
Purrham Furbottom: The founder of the Theater, he made the theatre prosperous once and apparently also was the original owner of the Hat.