Microsoft announced a revamped Xbox Avatar program yesterday at E3 2017. The new Xbox Avatars have been redesigned with diversity and inclusiveness in mind, so for example, avatar clothing and accessories are no longer locked into gender categories. Prosthetic limbs and wheelchairs are options as well as a pregnancy “baby bump” and various other physical traits. According to the producers, the redesign is being done in Unity.
Xbox Avatars were originally launched in 2008 on the Xbox 360, but the characters dropped in popularity when the Xbox One launched which (as of now) does not feature them in any prominence. The new Avatars will launch this autumn on Windows 10, then later on Xbox One consoles, presumably with a user interface update that will give them more visibility.