The S3TC textures are in general 4 to 6 times bigger than the normal textures.
The texture i tested today is 128 x 256 pixels as normal texture. The S3TC version is 1024 x 2048. If you aply the S3TC texture to the game the scaling goes wrong.
Example of the normal texture.
[img]http://www.celticwarriors.net/website/S3TCMedia/Deck16Normal.jpg[/img]
Example of the S3TC version when scaling goes badly wrong.
[img]http://www.celticwarriors.net/website/S3TCMedia/Deck16Wrong.jpg[/img]
Than the fixed S3TC texture.
[img]http://www.celticwarriors.net/website/S3TCMedia/Deck16S3TC.jpg[/img]
I found this setting in the texture properties that does the trick: Drawscale
[img]http://www.celticwarriors.net/website/S3TCMedia/Drawscale.jpg[/img]
Normaly the Drawscale is set to 1.000000, i aplied a simple calculation 128 : 1024 which gives a number of 0.125, which i aplied to the texture (Drawscale 0.125000)
That setting seems to fix the problem, the texture is still 1024 x 2048 but in this case Unreal willl set its default size to 0.125 which malkes it 128 x 256 which is the same size as the original texture.
This setting has be implemented to the utx packer, if not than the retexturing can't work !!!
Interesting note is, The texture i tried is 1024 x 2048, this probably means that Unreal indeed seems to support 2048 x 2048
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