Digital Domain Media Group, the visual effects company co-founded by James Cameron, is entering into Chapter 11 bankruptcy protection. The company produced effects for some 90 Hollywood films, including Titanic, the Transformers trilogy, and The Curious Case of Benjamin Button, although it undoubtedly gained the most exposure for deceased rapper 2Pac’s holographic performance at the Coachella festival in April.
In recent years a combination of cheaper technology, globalization, and tax incentives abroad has eroded margins in the American visual effects industry, leaving a trail of closures in its wake, of which Digital Domain is the latest example. Visual effects can eat up as much as 40 percent of modern film budgets, and the standardization of tools like Adobe After Effects and Nuke has made it possible for smaller shops from abroad to crack into the business.
CEO Ulbrich says any delay in selling will have big consequences
The news follows years of losses from the company and comes just 10 months after an IPO that Seeking Alpha then referred to as facilitating "growth of a so far unprofitable business model." Although it was once valued at a high of $400 million, private equity firm Searchlight Capital is offering a scant $15 million for the majority of Digital Domain’s assets.
The company's new CEO, Ed Ulbrich, is pushing for a quick sale, pointing out that any delay could jeopardize work that Digital Domain has in the pipeline, reports The Wall Street Journal. But the 12- to 14-day time frame Ulbrich is shooting for would limit the ability of other potential buyers to put together bids for the mandatory one-day auction required under Chapter 11. Judge Brendan Shannon had originally insisted any sale be put on hold until around October 2nd at the earliest, but gave in after hearing testimony from a Marvel Entertainment executive who said his studio would withdraw its business if Digital Domain's future was still undecided next week, reports The Chicago Tribune. The one-day auction is tentatively scheduled for September 21st.