Palm Beach Post Staff Writer

You could mount a pretty fair touch football game in the lobby of Digital Domain's new 115,000-square-foot studio in Port St. Lucie, so it goes without saying that there are cavernous rooms inside this cavernous building.

There is one particularly large area, an eerie, black space illuminated only by the low, ambient light thrown off by 96 computer screens in 48 cubicles.

Here, special-effects technicians are working on several projects: inserting background shots of the Hollywood hills into the Miami-filmed locations of Tom Cruise's summer musical, Rock of Ages; crafting a futuristic commercial for the New York Mets; and converting a shredded metal blockbuster from a few years ago into 3-D. Elsewhere, a creative team is developing an original animated film.

By merging private creativity with government seed money, the Florida campus of Digital Domain may be the state's biggest and boldest attempt at creating a long-dreamed-of indigenous film industry.

The Port St. Lucie facility opened in January and its second phase, an education campus allied with Florida State University's highly rated film school, with tax credits and financing from the state and the city of West Palm Beach, will be breaking ground before the end of the year on Okeechobee Boulevard, across from CityPlace.

Port St. Lucie is not a production facility, it's a post-production facility, and things are booming. When it opened in January, it had three jobs in active production; now there are five, including The Legend of Tembo, the studio's first animated feature.

For special-effects studios, these are good times. Digital Domain is one of six or eight reliable American houses that contracts for work on major special-effects films. They've developed a specialty in people - aging Brad Pitt in Benjamin Button, converting old Jeff Bridges into young Jeff Bridges for Tron: Legacy. Their work has been prominently featured in Real Steel, Thor, the Transformers movies, and The Avengers.

Besides Port St. Lucie, with a staff of 320, the company has studios in Vancouver, Los Angeles, Mumbai and London.

And just a few weeks ago, Digital Domain announced a project in Abu Dhabi that is the twin of the Florida operation - a post-production studio combined with a digital college in a facility of 150,000 square feet, financed by $100 million in government grants.

"It's really a blend of Port St. Lucie and West Palm Beach," says John Textor, the CEO of Digital Domain. "And it was inspired by what they read about Florida - they wanted the same kind of model."

Digital Domain was founded by James Cameron in 1993, and the company did the computerized special effects, or CGI, work for Titanic. Cameron eventually sold the company, and it was bought by Textor in 2006.

Textor is a Palm Beach native who attended Twin Lakes High. He's a financier, not a movie guy.

"My father was a doctor, but he left when I was young," says Textor. "My mom had three jobs - working in an art gallery, a stationery store and doing calligraphy for Palm Beach socialites. We grew up in Golfview, a little place on the edge of the airport that's long gone."

"I've never viewed myself as being in the movie business," says Textor. "I don't even think that today. I mean, nobody sees me out in L.A. I don't care about going to premieres, I go to my kid's soccer games. I've missed maybe five soccer games in seven years.

"What I believe in is content. I think content is a note of music, a poem, a lecture in front of a class, a movie. And I believe in technology and how it makes the path of moving the content to the audience more efficient. I'm a huge believer in digital distribution connecting ideas and people."

The staff of the Los Angeles branch rises and falls depending on the projects at hand, but the Florida operation is more permanent. "We have year-round staffing here, because you can't expect people to leave five months after moving here. We have to make a commitment," says Jonathan Teaford, the company's CFO.

Digital Domain's global spread makes it possible to accomplish rush jobs, which is the norm today in the digital effects business, according to Bill Desowitz, former editor of the trade journal VFX World.

"There's less and less time to do the work, it's more and more demanding," says Desowitz.

But despite the growth, and votes of confidence from governments all over the world, investors remain unimpressed.

In 2009, Digital Domain made a profit of $8 million, but the company lost $45.2 million the following year. 2011 was more of the same - a loss of $140 million on revenue of $98.6 million. The first quarter of this year showed a loss of $14.8 million against revenue of $31.1 million.

Last November, the company raised $39 million from investors in an IPO, down from a target of $55 million. The shares sold for $8.50 each; in the first week of June, the stock is selling in the $7.40 range.

In 2009, the company got a $20 million state grant and $51 million worth of land and loans to bring an estimated 500 animation jobs to Port St. Lucie.

For the West Palm Beach school, the city has contributed a $10 million grant and a $15 million loan. In all, Florida has promised $132 million in cash, land, tax credits and financing to the company.

Textor ascribes the losses to what amount to start-up costs. "Losing money from an accounting perspective and a cash basis are two different things," he insists. "I don't believe we'll lose money by the end of 2012. We told the taxpayer in Florida that we would spend an enormous amount of money educating people, and the accounting implications of that are unattractive. There have been very few private companies funded so heavily by public partnership.

"We have to record the expenses up front, even though the revenues only come in over time. In terms of overhead, these grants get us through training, paying people full salary while we're teaching them. And because we're at the high end, you have to pay them for many many months before they're ready. And Florida realizes that, and Abu Dhabi realizes that. By the time you burn off the grants, then you create revenues."

The school in West Palm Beach is essentially what CFO Teaford calls "a neat proposition for both the students and the company." The idea is to create a pipeline which will be steadily filled by the best and the brightest of the Digital Domain/Florida State pupils.

Although the school won't be completely up and running until 2015, Digital Domain is already holding classes in a downtown building on Rosemary Avenue. "The essence of what we teach is combining live action and CG into the final product," says Bruce Bullock, the director of education for the Institute. "Our strengths are technical skills, which will be combined with Florida State's skills in story and communication."

At the moment, 19 kids are paying $4,750 per class for 10-week sessions being taught by three instructors. By the time the Okeechobee building is constructed, the course of study offered by the Digital Domain/FSU school will last three years and enrollment will be around 500, with 100 graduates emerging into the job market every year, competing for programmer jobs that pay in the low six figures.

"It's an industry looking for skill sets," says Bullock, "and we're looking to give our kids those skill sets."

One of those kids is Chris Ryan, a 25-year-old from Jupiter. He works days for a real estate broker and is going to school at night. He'd already taken courses in Design Theory, and since enrolling at Digital Domain he's decided he wants to go into digital matte painting - the computer-built backgrounds in special-effects blockbusters.

"My favorite special-effects movies are What Dreams May Come, The Fountain and Blade Runner," says Ryan. He's been out to Los Angeles just once, and liked it, but, he says, "If I have a chance to stay here and do what I love, and continue to live in Jupiter, I'll definitely do that."

In a second-floor group of offices in Port St. Lucie, The Legend of Tembo is slowly taking shape. It's a movie about an African elephant - Tembo is Swahili for elephant - but it's being made by a couple of guys from Florida.

Aaron Blaise (born in Naples, animation skills courtesy of the Ringling School) and Chuck Williams (Starke, education at Florida State) have been working together since Disney hired them both on April 17, 1989, to work on The Little Mermaid.

For 15 years, they worked at the Disney-MGM animation studio in Orlando. Besides The Little Mermaid, they worked on The Lion King, Beauty and the Beast and Mulan. Blaise co-directed 2003's Brother Bear, and Williams produced it. But the satellite studio was closed in the wake of a couple of animated disasters, most prominently Treasure Planet.

They moved to the Disney studio in Los Angeles, but they wanted to come home. When Digital Domain opened its Florida operation, they went for it.

"We could have stayed in the studio system," says Williams. "It has a culture all its own, but John Textor's idea of films was what we wanted to do."

The pair developed a dozen ideas for the studio's first animated feature, then winnowed them down to four. At the crucial meeting, Textor asked them, "What movie do you want to make?" and the two looked at each other and blurted out Tembo."

Both look like Florida guys, with tropical shirts and casual dress - Blaise even has a ponytail. On the walls around the tables in the center of the room are storyboards and Blaise's luscious concept art for the film.

"Glen Keane (Beauty and the Beast) was my mentor," says Blaise, "and he favored emotional, epic stories that find a place in your heart."

Animation is terribly demanding. As Blaise says, "good filmmaking is re-filmmaking. The only way to bring animation from mediocre to great is reshooting."

The two men and their crew of 100 - "There's a lot of young guys, and a lot of 40 year-old guys," says Williams - have been on the picture for a year, and they've got two years to go.

Needless to say, animation is expensive - the rule of thumb is $1 million a minute, but a start-up could run higher. A lot is riding on the broad shoulders of Tembo - a flop could put Blaise and Williams on the street, along with their crew - but they understand the equation: High risk equals high reward.

"John is thinking long term," says Chuck Williams. "He's thinking of a way to build a filmmaking culture. Finding people used to be a lot easier 10 years ago. So what he wants to do is grow our own talent. It's a truism that you work just as hard on crappy films as on good films, and here's a chance to make our own good films."

The thing about the special-effects business is that, unless you're an in-house studio boutique financed by serious money, it's all piecework, and it's usually low-margin piecework, with a lot of competition for contracts.

Textor says that's why he's expanding the company's vision into original movies and education. "We bought the company and immediately turned it into a content creation company that would give us films that we had a participation in the box office.

"And taking the technology of visual effects out of the entertainment business can be very lucrative. There's a $28 billion military simulation business and there isn't one high-end effects company in that industry. We're setting out to make these technologies exportable to other businesses.

"In terms of the schools, we'll give people the tools to go into 200 career directions. The summary line, if I have to put it into a sound bite, is that there's more opportunity in teaching the world to do what we do, than in continuing doing what we've been doing. Teaching the Chinese to put their dreams on screen, teaching the emerging Middle East to put their dreams on screen - Hollywood doesn't have a monopoly on storytelling."

In addition, Digital Domain is also producing its own pictures. Shooting now is an adaptation of Ender's Game, a sci-fi thriller starring Harrison Ford. It's a co-production with Lionsgate, and Digital Domain will own 38 percent of the movie.

And then there's Tupac.

A recent surge of public and private interest occurred in April, when the company unleashed a digital hologram of Tupac Shakur, dead these many years. The stock price quickly ran up to over $9 a share, although it has since fallen back.

Digital Domain has a division called Virtual Performer, and the best case - or, depending on your feelings, the worst case - envisions holograms of Frank, Dean and Sammy headlining in Branson and Vegas, or Michael Jackson finally pulling off the tour that his death interrupted.

"We're putting a world-class digital-effects house together with a live-action facility that should put us on an animation plane with Disney and Pixar," says CFO Teaford.

All this, of course, presupposes that the complicated web of public and private financing, combined with the boom and bust world of the movies, continues to coalesce to the advantage of Digital Domain.

If all that holds true, Digital Domain has a chance to live long and prosper.

scott_eyman@pbpost.com