I think this is a great way to get students motivated to use the language, as well as a nice group project idea. The fact that the characters in the "movies" have conversations gives students a nice chance to practice Q & A forms and conversational, authentic language, as opposed to more "presentational" oral expression. Students can think creatively, and the movie assignment can be as free or controlled as the teacher wishes. It would be great to incorporate movie-making as a homework assignment after spending the class brainstorming plot lines, or learning about expressions or vocabulary to use in writing your scripts. Script-writing could even be a multiple-step process, with the teacher proofreading a first draft and correcting or encouraging elaboration where needed.
I've used similar technology in classes with young learners, and they loved it. I think it would work extremely well for high school students, and could be adapted to any level. This website produces extremely professional looking short movies, much higher quality than other similar websites I've used.