Snap spins off AI video team into new company, Dotmo, due to costs

Snap will house an internal generative AI video team in a separate company. The new company – called Dotmo – will focus on developing AI models that can create interactive gaming experiences, Snap told TechCrunch.

Snap cited the high cost of doing such work in-house as one of the reasons for the spinoff.

While Dotmo is technically a separate company, it will maintain close ties to the Snapchat maker. To start, Snap will license Dotmo to adapt its technology for gaming and interactive entertainment platforms. At the same time, the initial Dotmo team will consist of a group of current Snap employees who are leaving Snap to launch the new venture.

In addition, while Dotmo will not be funded directly by Snap, the company says that Bobby Murphy, its chief technology officer, will serve as lead investor and will have a significant personal stake in the new company. While Murphy is a financier, he will continue to work full-time for Snap as CTO and lead GenAI’s research and development initiatives.

In exchange for the talent and technology license, Snap will get a large equity stake in Dotmo, the company said — a position that could be worth it if the company prospers in the future. Dotmo may also eventually seek external financing, Snap said.

The move marks Snap’s second major spinoff effort this year. Earlier in 2026, Snap spun off Specs into a new company that would focus exclusively on the development of its smart glasses line. (Snap’s recent Specs unveiling wasn’t exactly a success for the company. Snap’s shares fell after concerns were raised about the high price tag attached to the new smart glasses, which is around $2,200.) Snap also underwent a round of layoffs earlier this year, cutting about 1,000 jobs.

Dotmo represents a different kind of spinoff than the Specs operation, in that the team will focus on developing digital experiences that are not currently part of Snap’s core business, a Snap representative said. However, it could still be considered a partner in the future if the fit seems right, she added.

Spinoffs can be a cost-saving strategy for companies, although they can also serve a variety of other purposes, such as showcasing a particular asset, generating investor attention, or providing operational flexibility to the team involved. By rolling out Dotmo, Snap can reduce the financial burden associated with its AI efforts, while still remaining exposed to any upside through its equity stake.