Snap Spins Off AI Video Team into New Company Dotmo, Citing Costs

Snap has announced it will spin off its internal generative AI video team into a separate company called Dotmo, which will focus on developing AI models for interactive gaming experiences. The company cited the high costs associated with conducting such work internally as a key reason for the spinoff.

Although technically independent, Dotmo will maintain close ties with the Snapchat creator. Snap will provide Dotmo with a license to adapt its technology for gaming and interactive entertainment platforms. The initial Dotmo team will consist of current Snap employees who are leaving the company to launch the new venture. While Dotmo will not be directly funded by Snap, Snap's Chief Technology Officer Bobby Murphy will act as the lead investor and hold a significant personal stake in the new firm. Murphy will continue to work full-time as Snap's CTO and lead its generative AI research and development efforts.

In exchange for the talent and technology license, Snap will receive a large equity stake in Dotmo—a position that could prove rewarding if the company succeeds. Dotmo may also seek outside funding in the future, Snap said.

This marks Snap's second major spinoff this year. Earlier in 2026, Snap spun off its Specs smart glasses line into a new company. However, the launch of Specs was not well received; Snap's stock dropped after concerns about the hefty price tag of around $2,200. Snap also conducted layoffs earlier this year, eliminating approximately 1,000 jobs.

Dotmo represents a different kind of spinoff compared to Specs, as its team will focus on developing digital experiences that are not currently part of Snap's core business priorities, a Snap representative said. However, it could still become a partner in the future if the fit seems right. Spinoffs can serve as a cost-saving strategy, reducing financial burden while maintaining exposure to potential upside through equity stakes.