Digital Domain Media Group Announces Joint Venture in China

PORT ST. LUCIE, Fla., December 14, 2011 – Digital Domain Media Group, Inc. (NYSE: DDMG), a leading digital production company focused on visual effects, original content animation and major studio co-productions, today launched its expansion into the high growth China film market with the announcement of the company’s first strategic partnership in China. The partnership between Beijing Galloping Horse Film Co., Ltd. and Digital Domain represents the first large scale initiative of a global visual effects industry leader to address China’s quickly increasing demand for high-end, American-driven film production values, including the very best of visual effects and animation imagery. The venture also serves to expand DDMG’s industry-leading global footprint of the highest quality animation, achieved at the lowest possible cost.

The new Digital Domain – Galloping Horse Studio will provide visual effects, animation and production services for motion pictures, television and related media. The company expects that the facility in China will be comparable in scale to the company’s nearly completed animation studio in Port St. Lucie, Florida, a facility that was funded by the city with an investment of approximately $50 million for land and building.

Digital Domain Media Group and Beijing Galloping Horse Film Co. will each own 50 percent of The Digital Domain – Galloping Horse Studio. Digital Domain Media Group will contribute its technology and expertise in operating a VXF operation and will be responsible for designing the facility and for training personnel. Beijing Galloping Horse Film Co. will provide the land for the Studio and will be responsible for the construction and build-out costs for the new facility. Galloping Horse will also lead related fundraising for the venture in the greater China capital markets.

The Digital Domain – Galloping Horse Studio may seek to expand these core services to develop additional media and entertainment services, including proprietary technologies and entertainment properties.

This agreement, which marks the company’s first step into the high-growth film market in China, provides the company with access to a source of efficient capital in China, and provides Beijing Galloping Horse Film Co. with access to the core U.S. film industry. This joint venture is another example of the Company’s use of strategic partnerships to implement its growth strategy. Not included in this agreement, but part of the company’s strategy in China, are various potential partnerships with Chinese companies focused on film production and financing and promoting the company’s education model.

“We have a high-growth model that is unique in its use of strategic and governmental partnerships to generate business expansion opportunities domestically and abroad,” said John Textor, CEO of Digital Domain Media Group. “We have mitigated financial risk by securing government grants or partner contributions for the high cost of land acquisition, facility expansion and training, and we have also mitigated business execution risk by partnering with well-funded, proven leaders in other markets.”

“This joint venture enables us to leverage our reputation for excellence and innovation in visual effects and our state-of-the-art proprietary technologies and patent portfolio into the large and rapidly expanding Chinese market,” continued Textor. “It supplements our strong studios in the U.S. and continues the implementation of our plan to expand our global footprint, adding to our existing international operations in Canada, India and London. It also highlights the growing importance of China as a market for video entertainment. Galloping Horse, which does not currently have VFX capability, is an ideal partner for us as we link our award-winning technology with that company’s excellent reputation and strong market position in China. In addition, Galloping Horse has an excellent track record of delivering blockbuster films in China and works with some of the finest film directors around.”

“China’s film industry is soaring,” said Ivy Zhong, the Vice Chairman of Galloping Horse. “According to Chinese Academy of Social Sciences, the box office in China had a 64-percent annual growth rate in 2010 and is expected to maintain a 30-percent growth in 2011. We are also seeing strong needs among the Chinese audience for blockbusters with heavy visual effects elements in them. We are very excited that Galloping Horse and Digital Domain, both top-notch in their respective fields and territories, are combining our expertise to form a state-of-the-art VFX venture to further explore this market here in China and also elsewhere in the world. This joint venture creates a truly global player.”

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