From SC4 Encyclopaedia
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LODs (stands for Level of Detail) are simplified versions of a model which are used to create .S3D files, which are the 3D objects that are ultimately displayed in SimCity 4. Modern computers are incapable of rendering highly detailed buildings in real time, so instead, pre-rendered images (.FSH files) are laid over very simple geometry. Because it's not practical to pre-render every possible angle and zoom, the game is fixed to four rotations and six zoom levels.
The pre-rendered images (.FSH files) have transparency masks, which mask out the black matting created during the render (the pre-rendered images are just like preview renders). Because of this, your building can have an irregular silhouette even if your LOD is a simple box. However, if part of your pre-rendered image sticks outside of the LOD, it may not be displayed in the game.
Only 3 LODs need to be made, LOD3, LOD4, and LOD5. .S3D files for zoom 1, 2, and 6 are derived from LODs 3 and 5 respectively.
Sometimes a basic box won't work for a particular situation. In this case, additional faces may be added to the model. Extremely complex LODs may even follow the lines of the model close enough to look like an untextured version or it, but this is rare. Reasons for requiring a complex LOD vary, but include:
- A basic LOD would be too large and obstruct prop placement on the Lot (picture a U-shaped building, a basic box would obscure any prop placed within the U)
- The LOD enters the ground in the game (goes below Z=0 in the [BAT]) and causes an odd effect
- The LOD would obscure some element that would be in/around the model
Though using complex LODs should be avoided when possible to avoid stressing the system more than necessary, proper use of them, with practice, allows for some great visual effects.
LODs can be made by any method you choose, the object must simply have the correct name (LOD3, LOD4, and LOD5). So, for example, you could delete an automatically generated LOD, and extrude a spline to make a new one.