Just in case you didn't know, you can use Live Photos as watch faces and they do animate. However, they're not as smooth as the stock motion faces and they don't seem to play the whole clip. At least there's potential here!
How do you get this to work? I chose a Live Photo as my Photo's Watchface and it does not animate. I don't have a separate watchface available for live photos. My apple watch is connected to an iPhone 6s Plus.
After a lengthy chat session with Apple Customer Service 2 things came to light. One is that the live photos have to be in the Favorites folder and that folder has to be synced. I'm not sure I believe this, but it's the only way it works for me. I also restarted watch and iphone 3x before it worked. They had me keep trying that and it eventually worked. weird!