Two major visual effects studios join forces for VR push

The animators behind 'Transformers' acquire their Chinese counterpart.

Digital Domain, the visual effects studios that brought you feature films like the Transformers series, the X-Men series, Iron Man 3 and Her, has announced that it's acquiring an 85 percent stake in Hong Kong's Post Production Company Limited and its parent company for HK$135 million (about US$17.3 million), in order to make a big push in virtual reality. This is obviously a big deal for both parties: Post Production has been involved in many major Chinese movies, TV ads, music videos and even a cooking show hosted by the company's founder, Nicholas Tse, who also happens to be a local pop artist and actor. Digital Domain CEO Daniel Seah put it best by calling Post Production "the Digital Domain of China," and he added that Tse will stay on to run that part of the business.

The acquisition is probably a timely rescue for Tse's Post Production. Back in September, the company had to reduce its workforce in Hong Kong to focus on its more lucrative business in Mainland China, according to Apple Daily. But that's not to say Digital Domain is in its best form just yet, as its CEO admitted that his company has yet to become profitable since it was bought out of bankruptcy in July 2013.

To reassure us, Seah said he's received sufficient funding to keep things going for a while, and he's confident that with major brands like Google, Sony, Samsung, HTC, LeEco and more driving the VR market, it'll convert to good business for Digital Domain. Not to mention that HTC's Peter Chou is also the Chairman of Digital Domain, though oddly enough, there were no Vive headsets at the event; only Samsung units were used to show off Digital Domain's VR demos like the Nike Hypervenom II ad (this was my favorite), a Conan 360 clip and a David Haye boxing match.

Following the acquisition, the two companies will be bringing Hong Kong's famous cartoon pig, McDull, to the VR world. On the other end of the spectrum, though, VR porn is still a definite no-go zone for them, according to Managing Director Rich Flier.

As evidenced by the Samsung Gear VR demo units and the cardboard VR headsets given out at the event, the smartphone is currently the key to driving VR adoption rate, which is critical to content providers like Digital Domain. But this does mean downgrading the content's quality to suit the common hardware, as opposed to limiting consumers to the expensive dedicated devices like the Vive or the PlayStation VR. Speaking of the experience on smartphone-based VR headsets, COO Amit Chopra said that while it should still please users in developing markets, he agreed that there's plenty of room for improvement. "[Right now] it's probably more of a 40 to 45 out of 100, but I think within one year you'll see us getting to the 60s and 70s. There's still a lot more to do, but the technology has to catch up."