Not too shabby, SSBM rules
We get very few SSB flashes on Newgrounds, and I enjoyed this one very much. Most of the jokes were predictable and used, but I got more than a few laughs out of this movie (especially when it was Link getting 1 of many nasty surprises). I like the sprite work, I'm impressed you got one for every character from SSBM (the Pokemon joke at the end was funny, I guess you're not much of a Pokemon fan).
The overall graphics weren't great, and the sound could use some work (you used mostly soundbites and some music). Using the same soundbite for when certain characters talk can be irritating (like Luigi), but you're onto a good start with your sprites. You might want to make the episodes a little shorter, as most people will get bored after 10 minutes if the action isn't up to pace (no offense, but this movie was rather slow).
Either way I'm getting interested in the plot of this movie, I'm a big SSBM fan, and you've got a nice idea here. Keep up the good work, and keep the gags rolling (Link's a great screwup, lol).
Good work, I hope you have episode 2 up soon.