Snap Spins Off AI Video Team as Dotmo to Cut Costs

Snap Creates Standalone AI Gaming Company

Snap is separating its internal generative AI video team into an independent company called Dotmo, which will develop AI models for interactive gaming experiences. The social media company cited the substantial costs of maintaining such research and development efforts in-house as a primary motivation for the spinoff, according to details shared with TechCrunch.

The arrangement preserves meaningful connections between the two entities. Snap will license its technology to Dotmo specifically for gaming and interactive entertainment applications, while the new venture's founding team comprises current Snap employees who are departing to launch the company.

Financial Structure and Leadership

Dotmo won't receive direct funding from Snap. Instead, Bobby Murphy, Snap's chief technology officer, will serve as the lead investor with a significant personal stake in the new firm. Murphy will continue his full-time role at Snap, including oversight of the company's generative AI research and development initiatives.

In return for the technology license and departing talent, Snap will hold a substantial equity position in Dotmo. This structure allows Snap to benefit financially if Dotmo succeeds while transferring the operational costs elsewhere. The new company may pursue additional outside funding in the future.

Why It Matters

This spinoff illustrates how even well-capitalized technology companies are grappling with the economics of generative AI development. By creating a separate entity, Snap can reduce its direct AI expenses while maintaining strategic exposure through equity ownership and technology licensing. The model offers a blueprint for other companies seeking to balance innovation ambitions with cost discipline, particularly in capital-intensive AI research.

Part of Broader Restructuring

Dotmo represents Snap's second major spinoff in 2026. Earlier this year, the company separated its Specs smart glasses division into an independent operation. That product launch faced market challenges, with Snap's stock declining after the $2,200 price point drew criticism. Snap also eliminated approximately 1,000 positions in a separate round of layoffs this year.

Unlike the Specs spinoff, which focused on an existing product line, Dotmo will pursue digital experiences outside Snap's current core business priorities. A company representative indicated that future partnership opportunities could emerge if strategic alignment develops.

The spinoff strategy serves multiple corporate objectives beyond cost reduction, including showcasing specific assets to investors, generating market attention for particular technologies, and providing operational independence to specialized teams. For Snap, the Dotmo structure addresses the financial burden of AI development while preserving upside potential through equity participation.

These details were first reported by TechCrunch.