Snap, the parent company of Snapchat, has announced the spin-off of its generative AI video team into a new independent company called Dotmo. The decision, revealed to TechCrunch, is primarily driven by the high costs of conducting such work internally. Dotmo will focus on developing AI models that can create interactive gaming experiences, a rapidly expanding sector.
Deal Details
Although Dotmo is technically a separate company, it will maintain close ties with Snap. Snap will provide Dotmo with a license to adapt its technology for gaming and interactive entertainment platforms. The initial Dotmo team will consist of current Snap employees who are leaving the company to launch the new venture. Additionally, Bobby Murphy, Snap's chief technology officer, will act as lead investor and will have a significant personal stake in the new firm. Murphy will continue to work for Snap full-time as CTO, leading its GenAI research and development efforts.
Sponsored Protocol
In exchange for the talent and technology license, Snap will receive a large equity stake in Dotmo. This position could prove rewarding if the company prospers in the future. Snap also stated that Dotmo may eventually seek outside funding.
Context of Snap's Spin-offs
This move marks Snap's second major spin-off this year. Earlier in 2026, Snap spun off Specs into a new company to focus exclusively on its smart glasses line. However, the recent launch of Specs was not a home run: Snap's stock tanked after concerns about the hefty price tag of around $2,200. Snap also underwent a round of layoffs earlier this year, cutting about 1,000 jobs.
Dotmo represents a different kind of spin-off than Specs, as its team will focus on digital experiences that are not part of Snap's core business priorities. However, a Snap spokesperson said Dotmo could be considered a partner in the future if the fit seems right.
Sponsored Protocol
Cost-Saving Strategy
Spin-offs can be a cost-savings strategy for companies, though they can serve other purposes like showcasing a particular asset, generating investor attention, or providing operational flexibility. By spinning out Dotmo, Snap may reduce the financial burden associated with its AI efforts while still maintaining exposure to any potential upside through its equity stake.
As we recently reported, similar strategic moves are reshaping the tech landscape: Apple decided to manufacture chips in the US with Intel, another example of how big companies are redefining priorities. For more on corporate spin-offs, see the Wikipedia entry.
Source: https://techcrunch.com/2026/06/18/snap-spins-off-ai-video-team-into-new-company-dotmo-due-to-costs
