Snap has decided to spin off its internal generative AI video team into a new company called Dotmo. The move is attributed to the high costs of conducting such work internally. Dotmo will focus on developing AI models for interactive gaming experiences, according to Snap. The new company will retain close ties to Snapchat, with Snap providing a license to adapt its technology for gaming and entertainment platforms. Snap will also gain a large equity stake in Dotmo, which could prove rewarding if the company succeeds. The decision marks Snap’s second major spinoff this year, following the separation of its smart glasses division, Specs. Snap said the Dotmo team will consist of current employees leaving the company to launch the new venture. The company also noted that Bobby Murphy, its chief technology officer, will act as lead investor and have a significant personal stake in Dotmo. However, Murphy will continue to work for Snap full-time as its CTO and lead its GenAI research and development initiatives. Snap will not fund Dotmo directly, but the company may seek outside funding in the future. The move is seen as a way to reduce financial burdens while maintaining exposure to potential upside. Snap also underwent a round of layoffs earlier this year, cutting 1,000 jobs. Dotmo represents a different kind of spinoff than the Specs operation, as its team will focus on digital experiences not currently part of Snap’s core business priorities. A Snap representative said the company may consider future collaboration if the fit seems right. Spin-offs can serve various purposes, including cost savings, showcasing assets, or providing operational flexibility. In spinning out Dotmo, Snap may be reducing the financial burden of its AI efforts while maintaining exposure to any potential upside through its equity stake.
Snap cited the high costs of conducting such work internally as one of the reasons for the spinoff. The initial Dotmo team will consist of a group of current Snap staff who are leaving the company to launch the new venture. Snap will provide Dotmo with a license to adapt its technology for gaming and interactive entertainment platforms. In exchange for the talent and the technology license, Snap will get a large equity stake in Dotmo, the company said — a position that could prove rewarding if the company prospers in the future. Dotmo may also eventually seek outside funding, Snap said. The move marks Snap’s second major spinoff effort this year. Earlier in 2026, Snap spun off Specs into a new company to focus exclusively on the development of its smart glasses line. (Snap’s recent unveiling of Specs wasn’t exactly a home run for the company. Snap’s stock tanked after concerns were raised about the hefty price tag attached to the new smart glasses, which is around $2,200.)
Snap also underwent a round of layoffs earlier this year, during which some 1,000 jobs were cut. Dotmo represents a different kind of spinoff than the Specs operation, in that its team will be focused on developing digital experiences that aren’t currently a part of Snap’s core business priorities, a Snap representative said. However, it could still be considered a partner in the future if the fit seems right, they added. Spin-offs can be a cost savings strategy for companies, although they can serve a variety of other purposes — like showing off a particular asset, generating investor attention, or providing operational flexibility to the team involved. In spinning out Dotmo, Snap may be reducing the financial burden associated with its AI efforts, while still maintaining exposure to any potential upside through its equity stake.
Source: techcrunch
