Visual effects giant Digital Domain, a Hong Kong-listed company behind the hologram version of late singer Teresa Teng , is betting that its ability to produce “virtual humans” will give it a foothold in a metaverse future. The company, which has worked on visual effects for multiple blockbuster Marvel Studios films, is hoping that as people’s lives become increasingly digital, they will “eventually need to have someone represent them in the virtual world”, CEO Daniel Seah said in an interview with the South China Morning Post . The company has previously presented its ability to create virtual humans as an asset in emerging technologies such as virtual reality. The CEO now says Digital Domain aims to be the “foundation of the metaverse” by creating digital avatars for end consumers. The metaverse is a conceptual term referring to an immersive virtual world where digital representations of people interact with each other in computer-generated environments, which some imagine as a future iteration of the internet. The idea gained traction last year as people spent more time online during the Covid-19 pandemic. Major tech companies have rushed to jump on the bandwagon. Social media giant Facebook rebranded itself as Meta last October, and Microsoft announced in January its acquisition of Activision Blizzard for US$68.7 billion in cash, the largest video game deal of all time. Microsoft said the buyout would “provide building blocks for the metaverse”. In mainland China, Big Tech and start-ups alike have also embraced the concept, and local governments announced plans to support metaverse development. However, authorities have cautioned against metaverse hype. Communist Party mouthpiece People’s Daily referred to the trend as a market frenzy, and a state-run think tank said the metaverse will have implications for “political security”. Digital Domain started working on its virtual Teresa Teng in 2012, according to Seah. The computer-generated 3D avatar of the iconic Taiwanese singer, who died at the age of 42 in 1995, has been used in multiple live stage performances over the years and to answer questions in interactions with fans. Most recently, the virtual Teng performed jointly with Chinese singer Zhou Shen for a local TV channel’s New Year’s Eve gala, generating widespread discussion on mainland social media platforms. While the avatar is generated by machine learning algorithms trained with a variety of images and footage from the internet and provided by the Teng Foundation, the virtual human is not autonomous at this stage, according to Seah, and needs someone behind the scenes controlling her behaviour. “We have people driving her to give her the direction on how to answer and also with the proper attitude,” Seah said. The company would not elaborate on how its virtual humans are “driven”. The company is also developing realistic virtual assistants, which Seah called “giving Siri a face”. With a project named Digi Doug, Digital Domain is creating 3D virtual humans that can answer questions and perform simple tasks, with facial details and expressions resembling an actual person. Years of experience in visual effects have helped the company create realistic faces. This experience has led to three Academy Awards for best visual effects for its work on The Curious Case of Benjamin Button , What Dreams May Come , and Titanic . The company was co-founded by Titanic director James Cameron in 1993. China’s Mandalorian? How virtual sets are changing visual effects in movies Seah sought to distance the technology of his company, which was acquired by Hong Kong-based Sun Innovation in 2013, from deepfakes , which are audio and video clips manipulated using artificial intelligence (AI) to yield fabricated results that appear real. Fake videos of public figures have stirred controversy in the past. Seah said the company is carefully handling “serious ethical issues” behind virtual humans. But the company uses AI in other areas, including for speech recognition and generation for Digi Doug. Digital Domain has internal guidelines regulating the operation of virtual humans, but industry-wide regulations will be needed in the future, according to Seah. “I’m sure there will be regulations,” Seah said. “If … one day before an election one candidate used Zoom and said something that he shouldn’t have, what happens after? If you don’t even know who you’re talking to, which could be someone else or an AI behind [the scenes], that can create a lot of issues.” He said the company has rejected requests to recreate political figures and for the virtual Teresa Teng to promote products like medicine, a potentially lucrative use case given the increasing popularity of live-streaming e-commerce in China. Seah said the company is in close contact with Teng’s family to discuss job opportunities. “Since 2012, every decision that we made, we made with the family together. That is the bottom line.” Frank Teng, Teresa’s brother and chairman of the Teresa Teng Foundation, said he has been keen to present his sister’s performance to her fans again. Digital Domain has worked on some of the most technical and lucrative Hollywood properties in recent years, including the recent hit Spider-Man: No Way Home , multiple Avengers films and Steven Spielberg’s Ready Player One . With movie production upended during the pandemic, though, the company saw huge disruptions to its operations across the US, mainland China, Hong Kong, Taiwan and India. This pushed the company to offer its production services to streaming platforms such as Netflix and Disney+, resulting in the company’s “best year” ever in 2020, according to Seah. The firm reported HK$601 million (US$77.1 million) in revenue that year. The company’s face-rendering technology even had a particular advantage related to the pandemic: it could be used to remove actors’ face masks in post-production, the CEO said. Despite record revenue, Digital Domain still struggles with profitability. Net losses widened to HK$584 million in 2020, from HK$400 million in 2019. On January 30, the company posted a notice to the Hong Kong stock exchange warning of even greater losses in 2021. Going forward, the company wants to focus on building virtual humans not just for industrial use, but for average users, according to Seah. “So that … whoever participates in the virtual world can have their own custom-made virtual character,” he said. “That is our positioning.”