Snap is turning one of its internal artificial intelligence projects into a separate company. The Snapchat parent said its generative AI video team will move to a new venture called Dotmo, which will focus on building models for interactive gaming experiences.

The spinoff reflects both strategic and financial pressures inside Snap. The company said the work is expensive to do in-house, making a standalone structure more practical for the team and for Snap.

Dotmo will not be entirely cut off from its former parent. Snap said it will grant the new company a license to adapt its technology for gaming and other interactive entertainment uses. The first Dotmo team will also be made up of current Snap employees who are leaving to launch the new business.

Although Snap is not directly funding Dotmo, the company is keeping a close connection to the startup through its chief technology officer, Bobby Murphy. Snap said Murphy will serve as lead investor in Dotmo and will hold a meaningful personal stake in the business. He will still work full time at Snap, where he leads the company’s generative AI research and development efforts.

In return for the team and the technology license, Snap said it will receive a substantial equity stake in Dotmo. That ownership could give Snap upside if the new company grows or attracts investors later. Snap also said Dotmo may eventually raise money from outside backers.

The move is Snap’s second major spinoff this year. Earlier in 2026, the company separated its Specs smart glasses effort into its own company, a sign that Snap has been willing to reorganize parts of its business into more focused units.

This latest split comes after a difficult stretch for Snap. The company laid off about 1,000 workers earlier this year, part of a broader effort to control costs. The company has also faced scrutiny over the economics of its hardware ambitions, including the launch of its Specs glasses, which drew criticism over their price.

Dotmo differs from the Specs spinoff in one important way. Snap said the new AI video venture is working on digital experiences that are not currently part of Snap’s core business priorities. That suggests the company sees Dotmo as adjacent to, but separate from, its main consumer product strategy.

Even so, Snap left the door open to a future partnership if the fit makes sense. A company representative said Dotmo could still be considered a partner down the road.

For Snap, the arrangement appears designed to lower the cost of continuing to develop advanced AI technology while preserving a claim on any future success. For the people joining Dotmo, the spinoff creates a more independent path to pursue a specialized AI gaming effort outside the constraints of a larger social media company.

More broadly, the move highlights a common corporate strategy in fast-moving technology markets. Spinoffs can ease expenses, attract investors, and give specialized teams more flexibility. In Snap’s case, Dotmo also lets the company remain involved through ownership and licensing, without carrying the full burden of internal development.