I think it's a mistake to call vtubing its own market. It might have been back when it was mostly JP-only, the tech was new, and the barrier to entry high. But now it's just streaming. How many talents out there do you know who live and die by their model? How many vtuber streamers do you know who absolutely would not have been successful without a virtual avatar? Many would probably be less successful, but not unsuccessful. The avatar is often just a way to break up the dead air and keep people focused, not a be-all and end-all of the product.
I don't think we'll ever hit the 'oversaturation' or 'decline' phase of things, because an avatar is just so generally useful in so many ways. It's branding, it's opsec of a sort, it can be changed and modified far more easily than your real-life face or assets, etc. There's already projects that even take the streamer out of the equation entirely and just use the avatar with an A.I controller. I'm near-certain that once the tech gets good enough, even little things like mascot avatars on store pages will start being animated. It's just a very simple way to reliably harvest attention. Your brain sees funny colored moving thing, it focuses.
