Snap will be spinning off an internal generative AI video team into a separate company. The new company — dubbed Dotmo — will focus on developing AI models that can create interactive gaming experiences, Snap told TechCrunch.

Snap cited the high costs of conducting such work internally as one of the reasons for the spinoff.

While technically a separate company, Dotmo will retain its close ties to the Snapchat creator. For one thing, Snap will provide Dotmo with a license to adapt its technology for gaming and interactive entertainment platforms. At the same time, the initial Dotmo team will consist of a group of current Snap staff who are leaving Snap to launch the new venture.

Additionally, while Dotmo won’t be funded by Snap directly, the company says that Bobby Murphy, its chief technology officer, will act as lead investor and will have a significant personal stake in the new firm. Though a financial backer, Murphy will continue to work for Snap full-time as its CTO and continue to lead its GenAI research and development initiatives.

In exchange for the talent and the technology license, Snap will get a large equity stake in Dotmo, the company said — a position that could prove rewarding if the company prospers in the future. Dotmo may also eventually seek outside funding, Snap said.

The move marks Snap’s second major spinoff effort this year. Earlier in 2026, Snap spun off Specs into a new company to focus exclusively on the development of its smart glasses line. (Snap’s recent unveiling of Specs wasn’t exactly a home run for the company. Snap’s stock tanked after concerns were raised about the hefty price tag attached to the new smart glasses, which is around $2,200.) Snap also underwent a round of layoffs earlier this year, during which some 1,000 jobs were cut.

Dotmo represents a different kind of spinoff than the Specs operation, in that its team will be focused on developing digital experiences that aren’t currently a part of Snap’s core business priorities, a Snap representative said. However, it could still be considered a partner in the future if the fit seems right, they added.

Spin-offs can be a cost savings strategy for companies, although they can serve a variety of other purposes — like showing off a particular asset, generating investor attention, or providing operational flexibility to the team involved. In spinning out 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.