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They look at lot better in that C64 version.

Perhaps that's because the graphics are actually a lot narrower on the C64.

With few exceptions, home computers and game consoles from the 240p era use dot clock rates that are simple fractions of the NTSC color subcarrier frequency of is f = 315/88 = 3.58 MHz. Different platforms used different fractions, most of which produced noticeably non-square pixels. Apart from the Neo Geo and Nintendo 64, few 240p platforms attempted to closely approximate the frequency that produces square pixels, which Rec. 601 defines as 12/7 color burst, or 6.14 MHz. (The closest are Neo Geo and Nintendo 64.) So horizontal lines of the same pixel count will have different physical lengths on different platforms, and horizontal lines of the same physical length will have different pixel counts.

The C64 dot clock is 16/7 of NTSC color burst (8.18 MHz), while the NES dot clock is 3/2 of NTSC color burst (5.37 MHz). This slower clock makes NES pixels 52% wider: a horizontal line that's 32 pixels long on the C64 is as long as one that's 21 pixels wide on the NES. The Capcom CPS-1 and CPS-2 use a dot clock very close to that of the C64, which is why graphics in Street Fighter II games had to be redrawn narrower for the Super NES.

I imagine that using a single palette for the entire map certainly didn't help (seriously, look: blue, green, brownish yellow and gray).

It looked like a poorly colorized Game Boy Color game at first. Before seeing that I didn't know a NES game could even look so awful.

It sometimes work ok though, like in The Immortal, and Solstice.

This game reeks of being a trashy port though, so I'm not surprised it looks like ass.

Everything except stonework (the house fronts, chimneys, well, and bridge) in this sketch is one palette, and it appears to work:



It's not how many palettes you have; it's how you use 'em.

Oh damn, I never realized those games have 4 color backgrounds. Ironsword is another game that pulls it off, IMO. In all 3 games the high contrast between the single hue background and the colorful sprites looks really nice.

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Not to toot my own horn or anything, but I did it too:



So it's not impossible to use only 4 colors and still have a nice looking background. Hell, it's not even that hard, that Conan game was just really bad at it.

The isometric games (Solstice and The Immortal) have a good reason to use a single palette: attribute block boundaries are completely misaligned with the level geometry.

Another understandable use for simplified attributes is when there are moving objects rendered as background tiles (i.e. software sprites), because there's a lot of tile animation involved and keeping the attribute data consistent might not be trivial.

Other than those 2 reasons, I can't think of a reason to be so cheap with background palettes. An unskilled programmer avoiding messing with the complexity of attribute tables? I could buy that, but attribute tables aren't THAT complicated, specially if there's no scrolling involved.

Could be the other extreme, an artist skilled enough that can get away making the entire environment with such a small set of colors. Depends on the scenery, but yeah (for example, if you're making a cave chances are you can get away with a few shades of brown for everything, since the entire cave could be pretty much rocks).

This, though...

This is where RGB makes things look far worse. The chroma blurring of composite helps a lot with a limited palette.

I'm pretty sure Wizards & Warriors I and II went the "single palette" way to make their levels. I don't know why they did that but they did.

Duplicate the same palette 4 times is the only way to meaningfully use the attribute table bytes as name table.