Snap has merged its AI video team into a new company, Dotmo, due to costs

Snap will spin off its internal AI video team into a separate company. Snap told TechCrunch that the new company — dubbed Dotmo — will focus on developing artificial intelligence models that can create interactive gaming experiences.

Snap cited the high costs of doing such work in-house as one reason for the spinoff.

Although it’s technically a separate company, Dotmo will retain its close ties to the creator of Snapchat. For one thing, Snap will provide Dotmo with a license to adapt its technology for interactive gaming and entertainment platforms. Meanwhile, Dotmo’s initial team will consist of a group of current Snap employees who will leave Snap to launch the new venture.

Additionally, although Snap will not fund Dotmo directly, the company says that Bobby Murphy, its chief technology officer, will serve as the lead investor and have a significant personal stake in the new company. Although a financial backer, Murphy will continue to work for Snap full-time as CTO and will continue to lead GenAI’s R&D initiatives.

In exchange for talent and a technology license, Snap will take a significant stake in Dotmo — a position that could be lucrative if the company thrives in the future, the company said. Snap said Dotmo may also eventually seek outside financing.

The move marks Snap’s second major effort this year. Earlier in 2026, Snap spun off Specs into a new company to focus exclusively on developing its smart glasses line. (Snap’s recent specs reveal was not a success for the company. Snap’s stock fell after concerns were raised about the hefty price tag associated with the new smart glasses, which is around $2,200.) Snap also underwent a round of layoffs earlier this year, during which about 1,000 jobs were cut.

A Snap representative said Dotmo represents a different type of spin-off than Specs, as its team will focus on developing digital experiences that aren’t currently part of Snap’s core business priorities. However, she could still be considered as a partner in the future if it seems appropriate, they added.

Spin-offs can serve as a cost-saving strategy for companies, although they can serve a variety of other purposes – such as showing off a particular asset, attracting the attention of investors, or providing operational flexibility for the team in question. By floating 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.