I distribute my games with music in opus format, which I have found gives the best quality to file size ratio. However, I prefer to do my own compression so that I can control the compression level. I use flac exclusively during development, which offers good compression with perfect (losssless) quality.
I can convert other lossless formats (e.g. wav) to flac if I have to. I refuse to use other lossy formats like mp3 and ogg.