Here's a merchandise cameo appearance.
In the Japanese show "Popee Performer", the title character interacts with a UFO catcher/claw machine as seen in this screen cap. The machine is full of fun Sonic & Tails plush dolls. It's probably no coincidence that they chose this machine for the setting because Sonic is so popular.
But what is the Popee Performer? It is this CG character here that is described as a somewhat-deranged clown with fake bunny ears & cat tail. The show seems likely to consist of him doing fairly bad things as he apparently dies at least 28 times over the course of it. It's seemingly all on purpose not-great CG so it looks a bit creepy too. To see it you can use Popee Performer Youtube. In this case, he's trying to get an action figure (it's CG too) of his friend a wolf creature that always wears scribbly white masks out of the machine. It is a commercial to announce that Popee Performer dolls will appear in Sega's UFO machines so the fans would know to try and go win them. The dolls are rare now, but the show still has fans. The show lasted until about 2001, so the era makes sense for this machine to appear. (You can also rather bet the show is real strange)