Mesh instances with different UVs not working

Yes, in that case you should use a single texture atlas and pass the (u,v) offset into this texture to your instance. That’s basically what the PG you linked does (https://www.babylonjs-playground.com/#64K1I1#2).

If you want to be able to do it with a regular standard / PBR material, you should create a material plugin.

See this answer from @Blake, who is doing it for instanced meshes, but it would be mostly the same for thin instances:

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