Vanda Engine 1 accepts DDS textures. But the texture of this scene is in TGA format and has an alpha channel which isn’t practical for this mesh. First of all, make sure that you have downloaded and installed NVIDIA Texture Tools for Adobe Photoshop from here. This will install NVIDIA DDS plug-in. The NVIDIA DDS plug-in supports the DXTC texture compression format and allows you to open and save .dds files in RGB and RGBA formats. Now open boat_fishing.tga in Photoshop and in Channels tab, drag the alpha channel to Delete Current Channel button. Select File | Save As. Then choose D3D/DDS type, and click Save. Since we don’t need the alpha channel, we save it as DXT1. When you save the file as DXT1, Vanda Engine 1 assumes that your dds texture has no alpha channel. In new dialog that appears, select DXT1 RGB 4 bpp | no alpha and click Save button.
For more information about batch processing in Photoshop to change file format of images, please refer to the following tutorials:
Using batch processing to change the file format of images to DXT format in Photoshop