Maybe to be fair they figured there's a difference between this and say Transformers. In that Transformers gained a franchise of other cartoons, video games, comics, toys, conventions, etc. The boys who watched it as kids grew into men and were still spending money on their old favourite show.
... I doubt there are that many women in their 30s and 40s now who are still obsessed with Jem and the Holograms is all I'm saying. Without being sexist, I just don't think most women are like that, certainly not as much as men is all. So I suppose they figured they may as well market it towards the younger girls of today. And if that means having some god awful One Direction song, and some "Youtube/American Idol/X-Factor etc" style themes of being famous I suppose I can understand.
Compared to Transformers and G.I. Joe Jem was in fact largely forgotten by the public and pretty much a dead IP, so I understand the movie not getting a 100 million dollar budget but if you use an an IP like that it's obviously for the fact that there are still fans (both hardcore and lapsed) who recognize it otherwise you could save the money.
They obviously want to appeal to younger people, that's completely understandable but you don't throw away everything that made Jem Jem. you want american idol/x factor style themes? Easy, that's already in the original show, that's how Jem and the Holograms became famous, they won a competition!
It was a local competition in a park but it would be incredibly easy to change it to an x factor like show. There's your plot for the movie, they need to win this thing to save starlight house run by aunt Molly Ringwald (I don't mind Jerrika being a teenager, that's a change that can work) and the Misfits are one of the competing bands.
Forget Starlight Music, it never made sense that Jerrika couldn't simply take the money she needed out of the company she co-owned or that she needed to win the competition in the first place, she could have given the Holograms a contract and be done with it. It also made no sense that Eric Raymond didn't want to sign both the Misfits and Jem & the Holograms.
Make Eric Raymond the producer of the show they compete in, make him biased against Jem for some reason, maybe because they won a spot through youtube and Eric doesn't like that because it takes control away from him and the Misfits resent JATM because they circumvented the entire auditioning process and jumped right into the stage shows from their living room.
They use synergy for a kick ass show on stage, and the effects don't have to be expensive, do it like TNG, the holograms fade in and out with a *whoosh* sound effect, primarily use them for costume changes or to confuse the Misfits with a Jem double.
They could have done a Jem movie on a low budget instead they combined Justin Bieber's youtube discovery with Hannah Montana.