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The exception would be for dialogue VO on cutscenes- I believe those would be most suitable for Stereo channeled .WAVs or .MP3s as the reason is obvious; for immersion purpose and deep mental involvement of contexts been told.

Conceptually, you're not wrong. Dialogue usually comes from the center channel for surround sound or is left as mono for stereo sound, but it is mixed up sometimes for immersion as you say. One example is Yoda's introduction in Empire when he says "...feel like what?" and Luke turns around. The audio for Yoda's line comes from the right channel because he's off-screen to the right of Luke. But there are complications with it for KOTOR and video games in general.

The main issue is that unlike with a film, with a video game you don't have a finished, edited video with the camera angles and the cutting locked in. A video game in 3D space can have all the characters' positions change based on how the scene is triggered, you can skip through parts of a cutscene if you're bored, different characters can be present, and so on. In a film, the video editing is completed and then only after that will the sound editor go in to adjust the balance and make the audio match the video. That doesn't happen with a video game, which is why developers will often include pre-rendered cinematics that do allow for that sort of editing, such as with the dream sequences in KOTOR.

This all depends on the game, of course, and how the engine handles cutscenes, but at least with KOTOR the camera angles are generated dynamically. There's a stock set of camera angles (#1, #2, #3, and #5, with #0 being a random choice) from which the game picks and the composition of each shot changes based on which angle is picked and where the characters are in the game world. Whether they're too close to each other, or too close to a wall, or there's something in between them, whether the player initiates the conversation from the speaker's right or left, which character is configured as the listener for a dialogue node - all these things can change how the scene actually plays out. KOTOR in particular is very bad at choosing its camera angles and characters frequently cross the line (they face one direction in the start of the scene, and later face another direction, which can be disorientating). It wouldn't be practical to edit the VO in stereo because there's a good chance it would not actually match the scene. The engine could be set up to have the VO come from each speaker, where they are in 3D space, just like the sound effects, but I don't believe KOTOR does this. And if even if it could, it wouldn't be a good idea due to all the crossing the line issues. A character's audio would switch from the right channel to the left channel and back because of the shoddy camera angles and that would be distracting.

So it's only practical to edit in stereo for cutscenes with specific camera angles and not rely on the usual haphazard dynamic system. You can do this in the game (angles #4 and #6) but it's more time consuming. Darth Malak's introduction is like this, for example, but Darth Bandon's introduction is not. I'm guessing they didn't have the time or budget to do it for all of them.

The other complication for KOTOR, though, is the VO simply can't be in stereo as far as we can tell. It specifically has to be mono or else the line will be mute. You could get around this, but once again it wouldn't be very practical. You would have to leave the real VO line mute and add a script to play some form of audio that is allowed to be stereo (I think music is) and doing that for every single line of dialogue in a scene would be tedious. A more practical solution would be to do a cut of the whole scene and make it unskipable so the audio can play out uninterrupted - but this may be annoying for longer scenes - or pre-render the whole thing as a Bink video, which would have no limitations on the audio but it does come with other limitations due to its nature of being pre-rendered.

This is another case of being in the 99% of things in KOTOR that could be done... but is more trouble than it's worth.

Thank you for the detailed explanation; appreciate it a lot!

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The other complication for KOTOR, though, is the VO simply can't be in stereo as far as we can tell.

I do believe [and is a fact] that the VO can be in stereo, as far as I can tell. I attached you a VO for the Jedi ambush on Tatooine which have been edited to be used on my playthrough; with the reason is for the VO to fit with N-DReW25's "Proper Sith Assassins for K1". That is a stereo channeled .WAV with 1411kbps of bitrate, and not yet been compressed with the Miles Sound System, but it works on my experience- as the only downfall would be its large size compared to the compressed one. Maybe if you like you can test-through the file in-game. Some elements which cannot be utilized with stereo channel are PC-NPC's reaction when they attack or getting hit to be specific is "n_darkjedim_atk1". I tried to use stereo channel on this one but the line is muted then. Another example are blaster's sound [your "Sound Effects for K1" implemented mono channel on them, I believe], lightsaber's humming sound, lightsaber's power-up -- power-down sound, and "pl_starmap_open", which is the SFX to the Star Map being opened.

nm27aasith07002_.wav

Huh, I thought people had reported being unable to have stereo VO. And I know it must be mono to generate lips. But if it can be stereo then I guess that's one annoyance out of the way. However, it would still only be viable, as I described, for scenes with pre-determined camera angles and character positions. Stuff like the Leviathan cutscenes, the Ebon Hawk cutscenes in K2, that sort of thing.