Snap spins off AI video team into new company, Dotmo, citing high costs

Snap is spinning off an internal generative AI video team into a separate company, a move the social media firm says is driven by the high costs of developing such technology in-house. The new entity, named Dotmo, will focus on building AI models designed to create interactive gaming experiences, Snap confirmed to Bitcoin World.

A strategic spinoff with close ties to Snap

While Dotmo will operate as an independent company, it will retain strong connections to its parent. Snap will provide Dotmo with a license to adapt its AI technology for gaming and interactive entertainment platforms. The initial team will consist of current Snap employees who are leaving the company to launch the venture.

Financially, Dotmo will not be directly funded by Snap. Instead, Snap’s chief technology officer, Bobby Murphy, will act as the lead investor, holding a significant personal stake in the new firm. Murphy will continue his full-time role as Snap’s CTO and will remain at the helm of its generative AI research and development initiatives. In exchange for the talent and technology license, Snap will receive a large equity stake in Dotmo, positioning the company to benefit if the startup succeeds. Dotmo may also seek outside funding in the future, Snap noted.

Part of a broader restructuring trend

This marks Snap’s second major spinoff this year. Earlier in 2026, the company spun off its smart glasses line, Specs, into a separate entity. That move came after Snap’s stock fell sharply following concerns about the $2,200 price tag of its latest smart glasses. Snap also conducted a round of layoffs earlier this year, cutting approximately 1,000 jobs.

A Snap representative told Bitcoin World that Dotmo represents a different kind of spinoff compared to Specs. The Dotmo team will focus on digital experiences that are not currently part of Snap’s core business priorities, though the company could be considered a future partner if the fit seems right.

Why this matters for Snap and the AI industry

Spinoffs can serve multiple strategic purposes for companies, including cost savings, showcasing a particular asset, generating investor attention, or providing operational flexibility. In spinning out Dotmo, Snap appears to be reducing the financial burden of its AI research while maintaining exposure to potential upside through its equity stake. This approach allows Snap to continue investing in generative AI without the full cost of an internal R&D team, a model that could become more common as companies seek to balance innovation with profitability.

Conclusion

Snap’s decision to spin off its AI video team into Dotmo reflects a pragmatic approach to managing the high costs of generative AI development. By creating an independent company with strong ties to Snap, the company can explore new interactive gaming opportunities while keeping its core business focused. The success of this strategy will depend on Dotmo’s ability to attract outside funding and build compelling products that justify the investment.

FAQs

Q1: What is Dotmo?
Dotmo is a new company spun off from Snap that will focus on developing generative AI models for interactive gaming experiences.

Q2: Why did Snap spin off its AI video team?
Snap cited the high costs of conducting generative AI research internally as a primary reason for the spinoff.

Q3: Will Snap benefit financially from Dotmo?
Yes, Snap will receive a large equity stake in Dotmo in exchange for the technology license and talent, allowing it to benefit if the company succeeds.