diff --git a/duke/Makefile b/duke/Makefile
index 6a7d2349..21d7556b 100644
--- a/duke/Makefile
+++ b/duke/Makefile
@@ -2,9 +2,6 @@ include ../Makefile.inc
 
 DOS33 = ../dos33fs-utils/dos33
 DOS33_RAW = ../dos33fs-utils/dos33_raw
-PNG_TO_40x96 = ../gr-utils/png_to_40x96
-PNG_TO_40x48D = ../gr-utils/png_to_40x48d
-PNG2RLE = ../gr-utils/png2rle
 B2D = ../bmp2dhr/b2d
 PNG2GR = ../gr-utils/png2gr
 LZSA = ~/research/lzsa/lzsa/lzsa
@@ -27,28 +24,21 @@ HELLO:	hello.bas
 DUKE:	duke.o
 	ld65 -o DUKE duke.o -C ../linker_scripts/apple2_2000.inc
 
-duke.o:	duke.s zp.inc hardware.inc duke.s duke.inc \
+duke.o:	duke.s zp.inc hardware.inc duke.s \
+	graphics/duke_graphics.inc \
 	status_bar.s draw_duke.s gr_putsprite_crop.s \
 	keyboard.s handle_laser.s
 	ca65 -o duke.o duke.s -l duke.lst
 
 ####
 
-duke.inc:	duke.lzsa
-	echo "duke_lzsa: .incbin \"duke.lzsa\"" > duke.inc
-
-####
-
-%.gr:	%.png
-	$(PNG2GR) $< $@
-
-%.lzsa:	%.gr
-	$(LZSA) -r -f2 $< $@
+graphics/duke_graphics.inc:
+	cd	graphics && make
 
 ####
 
 clean:		
 	rm -f *~ *.o *.lst HELLO DUKE
-
+	cd graphics && make clean
 
 
diff --git a/duke/duke.s b/duke/duke.s
index c6b4f26f..30e53af4 100644
--- a/duke/duke.s
+++ b/duke/duke.s
@@ -48,9 +48,9 @@ duke_start:
 	; load duke bg
 	;====================================
 
-        lda	#<duke_lzsa
+        lda	#<duke1_bg_lzsa
 	sta	LZSA_SRC_LO
-        lda	#>duke_lzsa
+        lda	#>duke1_bg_lzsa
 	sta	LZSA_SRC_HI
 	lda	#$c			; load to page $c00
 	jsr	decompress_lzsa2_fast
@@ -116,7 +116,7 @@ done_with_duke:
 	;==========================
 
 	; level graphics
-	.include	"duke.inc"
+	.include	"graphics/duke_graphics.inc"
 
 	.include	"text_print.s"
 	.include	"gr_offsets.s"
diff --git a/duke/graphics/Makefile b/duke/graphics/Makefile
new file mode 100644
index 00000000..261c86a0
--- /dev/null
+++ b/duke/graphics/Makefile
@@ -0,0 +1,23 @@
+
+PNG2GR = ../../gr-utils/png2gr
+LZSA = ~/research/lzsa/lzsa/lzsa
+
+all:	duke_graphics.inc
+
+####
+
+duke_graphics.inc:	duke1_bg.lzsa
+	echo "duke1_bg_lzsa: .incbin \"duke1_bg.lzsa\"" > duke_graphics.inc
+
+####
+
+%.gr:	%.png
+	$(PNG2GR) $< $@
+
+%.lzsa:	%.gr
+	$(LZSA) -r -f2 $< $@
+
+####
+
+clean:		
+	rm -f *~ *.o *.lst *.lzsa duke_graphics.inc
diff --git a/duke/duke.png b/duke/graphics/duke.png
similarity index 100%
rename from duke/duke.png
rename to duke/graphics/duke.png
diff --git a/duke/graphics/duke1_bg.png b/duke/graphics/duke1_bg.png
new file mode 100644
index 00000000..4528858f
Binary files /dev/null and b/duke/graphics/duke1_bg.png differ