Verge uses the fmod sound library to play all music and sound effects for games, and requires the fmod DLL file to be included along with the game EXE. It supports a very wide range of sound formats, however some are more appropriate for games than others. It is possible, with a bad choice of file formats, to make your game into a very large download. As this will tend to discourage people with slower connections, try to avoid this by using compressed sound formats.
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Module music file formats
Linx to Trups faw plz kthx. Note that all formats are compatible with ModPlug Tracker, except OXM, which is pretty much only playable in VERGE :)
.MOD - (originated on Amiga computers) The earliest of the tracking formats, this is the one you don't want to use in VERGE. It is severely limited and not widely supported. Not much else to say ;)
.S3M - (originated in ScreamTracker) Slightly more advanced than .MOD, but far more limited than .XM or .IT. Stay away from this one as well.
.IT - (originated in Impulse Tracker) Probably the best format for fledgling trackers and experts alike, .IT is the format of DOS-based Impulse Tracker. It supports everything but the kitchen sink, and it's easy to set effects like channel volume, panning, and surround. There really are no downsides to this format other than it was not compatible with V2. Your best choice for V3!
.XM - (originated in FastTracker) The format of DOS-based FastTracker2. FT2 is no longer developed, but there are several contemporary trackers that support this format. .XM is not as flexible as .IT, but it supports many of the IT effects, like panning, surround, etc. It lacks filters, and panning and surround are more difficult to do than in IT. The files are also larger than IT, but XM is still a favorite for those who were raised on FT2. Acceptable for VERGE. Also note that .xm can be converted to .oxm!
.OXM - (XM with OGG compressed samples) This format is the same as .XM, except that the .XM module's samples have been compressed using oggmod. The sound quality is excellent even at 60% compression, and if you're going for small filesize this is the way to go!
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Sound file formats (can also be used for music)
Some stuff about sounds
.WAV - DON'T USE!
.MP3 - DON'T USE!
.OGG - USE!