I want to achieve something similar to this game has. The way the lights are and how they effect whats around them.
I have tried using glow on objects and destination out to create lights but it doesn't look good.
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From that video it looks like you can probably do this with blend modes for objects/layers. There's actually a ready example in C2 you can have a look at, just go to File > New > Example: Lighting
One of the things I missed was using a sprite that didn't already have a glow around it.
Will this work for other colors besides white?
On that I'm not 100% sure, I think may just default to white. Perhaps you can use additional translucent objects and layers to give things a colored tint?