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

Snap is spinning off its internal generative AI video team into a separate company called Dotmo to develop AI models for interactive gaming experiences, according to Snap. The company told TechCrunch that high internal costs drove the decision. While Dotmo will operate independently, Snap will retain a large equity stake and provide a license for its technology.

The new venture’s initial team consists of current Snap employees who are leaving the company to launch the firm. Snap will grant Dotmo a license to adapt its existing technology specifically for interactive entertainment and gaming platforms.

How is Dotmo being funded and managed?

Snap will not fund Dotmo directly. Instead, Bobby Murphy, Snap’s chief technology officer, will serve as the lead investor and hold a significant personal stake in the new company, according to Snap.

Murphy will not leave his current post. He continues to work for Snap full-time as CTO and remains the leader of the company’s generative AI research and development initiatives.

Did You Know? Snap’s previous spinoff this year, Specs, focused on smart glasses that carried a price tag of approximately $2,200, a cost that contributed to a drop in Snap’s stock.

Why is Snap spinning off this AI team?

Snap cited the high cost of conducting generative AI video work internally as a primary reason for the spinoff. By moving the team into a separate entity, Snap may reduce its financial burden while maintaining potential future rewards through its equity position.

A Snap representative stated that Dotmo differs from the Specs operation because its team focuses on digital experiences that aren’t currently part of Snap’s core business priorities. The representative added that Dotmo could be considered a partner in the future if the fit is right.

Expert Insight: Samantha Carter notes that this move allows Snap to offload expensive R&D costs while keeping a “foot in the door” via equity. It transforms a high-burn internal department into a potential external asset without sacrificing the leadership of their GenAI roadmap.

What is the broader context of these changes?

This move is Snap’s second major spinoff in 2026. Earlier this year, the company spun off Specs to focus exclusively on smart glasses. That launch faced challenges, as investor concerns over the $2,200 price point caused the company’s stock to tank.

These structural changes follow a period of workforce reduction. Snap underwent a round of layoffs earlier this year that cut some 1,000 jobs.

What happens next for Dotmo?

Dotmo may eventually seek outside funding to grow its operations, Snap said. Because the company focuses on gaming and interactive models, it is likely to operate in a different market segment than Snap’s core social media business.

Depending on the success of its AI models, Dotmo could potentially reintegrate with Snap as a partner, though a Snap representative indicated this would depend on whether the fit seems right.

Frequently Asked Questions

What is the primary focus of Dotmo?
Dotmo will focus on developing AI models capable of creating interactive gaming experiences.

Does Bobby Murphy still work for Snap?
Yes. Murphy remains Snap’s full-time CTO and continues to lead its GenAI research and development initiatives while acting as Dotmo’s lead investor.

How did Snap’s previous spinoff perform?
The spinoff of Specs, which focused on smart glasses, saw Snap’s stock tank after the product was unveiled with a price tag of around $2,200.

Do you think spinning off experimental AI teams is a viable way for tech companies to manage high research costs?