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I am also curious about this. ATI1N is identical in quality to the alpha channel of DXT5, so it works great for greyscale images (better than DXT1, which requires conversion to BGR). It would be great to use it for specular masks of materials that aren't bumpmapped, saving file size and VRAM compared to using uncompressed I8 or the alpha channel of a flat normal map (being the same quality of the latter), without the tinting that occurs when using DXT1.
Of course, it depends on whether Source 1 actually properly supports ATI1N; after all, the VTF format supports BGRA5551 BGR888_bluescreen, but the alpha channel of those formats always shows up as opaque in-game regardless.
According to one of the developers behind Portal 2: Community Edition, ATI1N and ATI2N support is either broken or disabled in all Source Engine branches, so even if you encoded a VTF as such, it would fail to load in-game or in Hammer 4.
Version 7.6 VTFs (a custom version by the P2CE devs that supports deflate compression, which would be a much larger task for VTFLib to undertake) adds back support for these formats, but seeing as VTFLib is currently focused on the official versions of 7.5 and below, I think this issue should be closed @davie504@NeilJed.
This compression is better than dxt1 or 5.
But there is no options, but source engine supports it
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