Snap Separates AI Video Division Into Dotmo to Reduce Development Costs

Snap is spinning off one of its in-house generative AI video teams into a newly formed company called Dotmo. The new venture will focus on building AI models designed to create interactive gaming experiences, the company announced.

According to Snap, one of the main reasons for the decision is the high cost of conducting this type of AI research and development internally.

Although Dotmo will operate independently, it will continue to maintain strong ties with Snap. As part of the agreement, Snap will provide Dotmo with a license to adapt its technology for gaming and interactive entertainment platforms. The initial Dotmo team will also be made up of existing Snap employees who are leaving the company to launch the new business.

While Snap will not directly fund Dotmo, the company confirmed that Chief Technology Officer Bobby Murphy will serve as the lead investor and hold a significant personal stake in the startup. Despite his financial involvement, Murphy will remain with Snap full-time as CTO and continue leading the company’s generative AI research and development initiatives.

In return for providing both talent and the technology licensing agreement, Snap will receive a sizeable equity stake in Dotmo. The company said this ownership position could become increasingly valuable if the new venture succeeds in the years ahead. Snap also noted that Dotmo may seek outside funding as it grows.

The move marks Snap’s second major corporate spinoff of 2026. Earlier this year, the company spun off Specs into a standalone business dedicated exclusively to developing its smart glasses lineup. That decision followed Snap’s launch of the latest Specs device, which faced investor criticism over its approximately $2,200 price tag and contributed to a decline in the company’s share price. Snap also carried out a major round of layoffs earlier this year, reducing its workforce by around 1,000 employees.

Unlike the Specs spinoff, Dotmo will focus on building digital experiences that are not currently among Snap’s core business priorities, according to a company spokesperson. However, the representative added that Dotmo could eventually become a strategic partner if future opportunities align with Snap’s long-term objectives.

Corporate spinoffs are commonly used to reduce operating costs. However, they can also help companies showcase valuable assets, attract investor interest, or provide teams with greater operational flexibility. By creating Dotmo as an independent company, Snap appears to be easing the financial burden of its AI initiatives while maintaining the opportunity to benefit from the startup’s future growth through its equity ownership.