Snap spins off Dotmo to develop AI video for gaming

Snap is spinning off an internal AI video unit into Dotmo, a new company focused on models for interactive gaming and interactive entertainment. The move is more than a corporate shuffle: it shows how even a platform with more than 900 million monthly active users is choosing to push expensive AI bets outside its own balance sheet when the cost of talent, compute and product development gets too high.

Dotmo will begin with current Snap employees who are leaving to launch the venture. Snap said the work was being moved out because keeping it in-house was too costly, but the relationship will stay tight. Snap will license its technology to Dotmo for gaming and entertainment platforms, and Snap will keep a large equity stake in the business. Bobby Murphy, Snap’s co-founder and chief technology officer, will serve as Dotmo’s lead investor and keep working full time at Snap. The new company may eventually seek outside funding.

The spinoff gives Snap a cleaner way to pursue generative video without carrying all of the operating burden itself. That matters because the company has already been trying to reset its cost base. On April 15, 2026, Snap said it would cut about 1,000 jobs, or 16% of its full-time workforce, close more than 300 open roles and reduce annualized costs by more than $500 million by the second half of 2026. Chief executive Evan Spiegel said AI tools were already helping small teams move faster across Snapchat+, the ad platform and Snap Lite infrastructure.

The financial backdrop helps explain the pressure. Snap reported 2025 revenue of $5.931 billion, up 11% from a year earlier, adjusted EBITDA of $689 million and year-end cash, cash equivalents and marketable securities of $2.9 billion. The company also reported a net loss of $460 million for 2025. Against that mix of growth, profits on an adjusted basis and still-heavy losses, Dotmo looks like a way to keep exploring AI video while limiting the drag on Snap’s core business.

Dotmo is Snap’s second major spinoff effort in 2026, after Specs, the separate company focused on its smart glasses line. Snap’s June newsroom listing included the June 3 debut of Specs augmented reality glasses, underscoring how the company is dividing its most ambitious product bets into distinct vehicles. For Snap, the logic is increasingly clear: if generative AI video is going to be a future business, it may be one too expensive to build alone.