Snap spins off AI video team into Dotmo amid cost concerns

Snap will spin off an internal generative AI video team into a separate company called Dotmo, the company said on June 18. Dotmo will focus on developing AI models that can create interactive gaming experiences, and Snap cited the high costs of running that work internally as one reason for the spinoff.

What is Dotmo and who is funding it?

Dotmo is a newly formed standalone company that will build generative AI models for interactive gaming and entertainment, and it will launch with a team drawn from Snap staff leaving to found the venture. The company will not be funded directly by Snap; instead, Bobby Murphy, Snap's chief technology officer, will act as lead investor and hold a significant personal stake while continuing to work full-time as Snap's CTO and lead its GenAI research and development initiatives.

How will Dotmo remain tied to Snap?

Dotmo will retain close operational ties to Snapchat through a technology license and equity arrangement: Snap will provide Dotmo with a license to adapt Snap's technology for gaming and interactive entertainment platforms, and in exchange Snap will receive a large equity stake in the new company. The initial Dotmo team will consist of a group of current Snap staff leaving Snap to launch the new firm, and Dotmo may eventually seek outside funding.

What changed inside Snap to prompt this spinoff?

Snap framed the move as a response to the high costs of developing generative AI video internally, choosing to offload that expense while keeping exposure to potential upside through equity. This is Snap's second major spinoff this year: earlier in 2026 Snap spun off Specs into a new company to focus exclusively on its smart glasses line. The Specs unveiling prompted investor concern over the product's price tag, which is around $2,200, and Snap also cut about 1,000 jobs earlier this year.

Why it matters

Spinning the team into Dotmo lets Snap reduce its near-term financial burden from ambitious AI work while preserving a stake in any future success. The arrangement keeps Snap connected to the effort via a technology license and an equity position, and it preserves leadership continuity because Bobby Murphy will remain Snap's CTO while investing personally. For teams working on exploratory AI products that sit outside a company's core priorities, a spinoff can be a way to free them from internal cost constraints while allowing the parent company to avoid full funding risk.

What to watch

Watch whether Dotmo files for outside funding and how large outside rounds might be if sought; the company said it may eventually seek outside funding. Also track whether Dotmo's technology becomes integrated with Snapchat or other Snap platforms under the license agreement, and whether Snap's equity stake is later converted into meaningful revenue or strategic partnership opportunities.