Digital Domain: The Fall of a Movie Empire

"What the fuck is up, Coachella?"

In the dark California desert, a rapper who had been dead for 15 years shouted to tens of thousands of fans. Snoop Dogg and Dr. Dre flanked the stage, but the projected likeness of Tupac Shakur was the main attraction at the 2012 Coachella Valley Art and Music Festival. Everyone knew this image of Tupac wasn't real. But sometimes, people want to believe.

The resurrected West Coast legend belted out "Hail Mary" and a reunion duet with Snoop of "2 of Amerikaz Most Wanted" as he paced across the stage. A crucifix pendant glinted and swung over his glowing, tattooed torso.

"Hey yo, Pac. Let these motherfuckers know what kind of party they in right now," said Snoop.

"Ain't nothin but a gangsta party," sang Tupac.

It was a viral-marketing gold mine. Every smartphone within sight recorded the performance, and within minutes it was coursing around the web under headlines like "Rapper's De-Light: Tupac Hologram May Go on Tour" and "Tupac Hologram: The Future of Live Entertainment Is Dead." This newspaper's own music blog declared a few days later that the show had "crossed a new boundary in culture."

Despite the hype, this kind of special effect had been done before. It technically wasn't a hologram, but a two-dimensional video projected onto an invisible screen in an illusion called "Pepper's Ghost" that's been around since the 16th Century. But it was arguably the first time the technique had been combined with computer animation to simulate an actual person.

It was also a moment in the spotlight for one of the most important companies in the digital video effects business. That company, Digital Domain, had cooked up some of the greatest technical marvels in recent film history, notably the special effects for Titanic and the reverse-aging face of Brad Pitt in The Curious Case of Benjamin Button. Digital Domain, in collaboration with other effects companies, produced Tupac's computer-generated face for the "hologram," an idea that had been conceived by rapper Dr. Dre. In the days following the fake Tupac's debut, rumors spread that it might go on tour.

"There's certainly been a lot of talk on that; that's entirely up to Dr. Dre," said John Textor, the soft-spoken 46-year-old chairman of Digital Domain. He sat at a rakish angle, with a silver tie and combed-back hair, during an interview with CNBC.

Textor, a venture capitalist from South Florida, grew up in Palm Beach County. His business background included finance jobs, involvement in the snowboarding company Sims, and several hits and misses during the dot-com boom. He had little film industry experience except that he'd gone to college with Michael Bay, who'd gone on to direct Transformers and Armageddon. In 2006, Textor, along with Bay and other investors, including Dan Marino, purchased Digital Domain.

At the time of the purchase, Digital Domain was a California special-effects shop that did contract work for film studios. But by 2012, Textor had developed grandiose plans to move parts of Digital Domain to Florida and expand it here, making it a major player in the film industry — essentially, a Hollywood East. By the time Coachella rolled around, Textor had secured more than $130 million of government money to build two landmark projects in the Sunshine State: a film and visual-effects school called the Digital Domain Institute and a state-of-the-art film studio in Port St. Lucie.

Everyone wanted a part of the dream: City governments threw money at him, investors worldwide backed the company, and bright-eyed students believed they could have careers in film despite the industry's dismal economics.

But before the school was filled or a single feature film made it out the door, Digital Domain folded, and Textor turned from a savior to a villain in a blink of the public's eye. Digital Domain's heavily hyped future turned out to be as much a mirage as Tupac stomping around the stage at Coachella. Its downfall can really be traced to Textor, a man who has a way of stoking big dreams in politicians, moviemakers, and the public. His rise and fall says much about the get-rich-quick culture that rules Florida politics — and our own myopia about what it means to establish a lasting economy in America's southernmost swamp.

Scott Ross, a communications student from New York, headed out to California in the '70s to pursue a career in film and television. He was a sound mixer, engineer, and cameraman and ran his own video postproduction company. After selling the company in 1993, he was recruited by George Lucas to run Industrial Light and Magic (ILM), the groundbreaking effects shop behind Lucas's Star Wars trilogy. ILM continued to be the premier effects shop of the decade, and Ross ended up as senior vice president of several divisions of LucasFilm. One of Ross's clients at ILM was the up-and-coming director James Cameron, who had a huge hit with the Terminator films.