Creating a believable hologram, capable of performing two songs, isn't easy—or cheap. From the MTV article:
"We worked with Dr. Dre on this and it was Dre's vision to bring this back to life," said Nick Smith, president of AV Concepts, the San Diego company that projected and staged the hologram. "It was his idea from the very beginning and we worked with him and his camp to utilize the technology to make it come to life."
According to a spokesperson for Dre, the lifelike image of Shakur was created by Hollywood effects house Digital Domain, the Oscar-winning CG factory that made CG images of Brad Pitt in The Curious Case of Benjamin Button, Jeff Bridges in TRON: Legacy, Kevin Bacon in X-Men: First Class and Rooney Mara in The Girl with the Dragon Tattoo...
Smith said he wasn't allowed to talk about the creative aspects of the production - including how the hologram was able to seemingly perform the set in synch with Snoop and whether all the vocals were 'Pac's - but he did say that his company has the ability to recreate long-dead figures and visually recreate them in the studio. "You can take their likenesses and voice and ... take people that haven't done concerts before or perform music they haven't sung and digitally recreate it," he said.
The Tupac hologram apparently took several months to plan, and then nearly four months to create. Smith was reluctant to reveal to MTV exactly how much the project cost, but did say that a comprabale one would cost somewhere between $100,000 and $400,000. [MTV]