Snap is reportedly looking to carve out its internal unit working on AI video generation as a standalone company.
The new company will be called Dotmo and will focus on developing AI models capable of creating interactive gaming experiences, according to a report by TechCrunch. The high costs associated with developing AI video generation models is one of the key reasons behind the move.
Spinning off internal teams into separate companies is not new for the Snapchat parent. Earlier this year, Snap announced the launch of its subsidiary, Specs, focused solely on developing smart glasses. Those efforts came to fruition last week when Snap unveiled its first-ever AR glasses. However, the device comes with a , which has raised concerns that it may be too expensive to compete with rival products from Meta and other tech companies.
With spin-offs like Dotmo and Specs, Snap may be looking to cut costs associated with its AI strategy while still maintaining exposure to any potential upside through its equity stake. Dotmo, however, will be different from Specs as the team will be focused on developing digital experiences that are not currently a part of Snap’s core business priorities, according to a company spokesperson cited in the report.
Dotmo is expected to serve as a separate company. This means that it will directly. However, Bobby Murphy, Snap’s chief technology officer, will act as lead investor and will have a significant personal stake in the new firm. A group of current Snap employees will be leaving the company to join the new venture.
Snap will also reportedly provide Dotmo with a license to adapt its technology for gaming and interactive entertainment platforms. In exchange for the talent and the technology license, Snap will receive a large equity stake in Dotmo. Dotmo may also eventually seek outside funding, according to the company.
