We have slightly modified this nifty diagram from S3's technology presentation. It is not intended to explain what texture compression algorithms are but rather how they work in your system.

(1) Textures can be compressed at author-time or at run-time. Normally, 3D applications ship with compressed textures. Compression can also be done at run-time using the DirectX6 API as textures are loaded into memory (AGP or frame buffer). Typically, compressed images suffer no perceptible loss of image quality.

(2) Compressed textures require 1/6 normal amount of memory. Reduced storage requirements allow for higher resolution textures and a greater variety of textures per scene for improved quality. Also, when textures are stored in frame buffer memory, the additional available memory due to texture compression can be used to perform triple buffering for improved performance.

(3) Reduced traffic on AGP bus and in system memory. Texture read bandwidth equivalent to AGP-12X yields superior AGP texturing performance.

(4) Dramatically reduced traffic in frame buffer memory. Leaves extra bandwidth for Z and destination reads & writes resulting in superior sustained fill rates.

(5) Data is decompressed on-the-fly. Data is decompressed as its read into the 3D engine, so decompressed data is never stored in memory or moved across a bus. There is no performance penalty for decompression.

Matt Powers, Producer of Accolade's Slave Zero had this to say regarding the use of S3TC in games:

"Personally, I think S3TC provides great potential for developers and their product. Using S3TC will remove the limitation of texture sizes/limits (or at least reduce the limitation). But until it is an industry standard it will be difficult for us to create a lot of content - because it does require unique content (new textures) which equals time (and money). Slave Zero supports S3TC and we hope to create some unique content which takes advantage of this great technology."