The skeleton is there, but needs flesh and soul.
Let's start with the positive. The fight choreography, while pulling plenty of inspiration from anime, is fluid and there is a variety of different techniques applied, though some of the magic attacks could probably use a bit more flair. The action definitely keeps in these scenes, though I think having the grid background takes away from the overall visuals.
I'll leave the art theory to those with more experience, but I may be able to give some advice about characters and story. The story has been done (.hack, of course, being the big one), but that in itself isn't the problem. In general, some personal touches with the setting, how the game works/is played, might freshen up a story that is generally seen as stale. Also, while I wouldn't recommend going full-force on the audience with the exposition stick, some more background into the game itself might make the story more clear.
The characters are very stock in their personalities. These characters can certainly be built upon in later episodes, along with their motivations and backgrounds, though sooner than later would be best. In particular, I found the relationship between Flamegirl and Alpha to be forced, just coming out of nowhere as they chat by the fire. And while I understand that the dragon character is supposed to be comedic relief, the constant restating of his name (along with the same animation, no less) gets very old very quickly. I find it almost ironic that for how many times he states his name, I can't remember it.
I do hope you take some of the advice that myself and others have given. By all means, it's not meant to be mean-spirited, but a way to sharpen one's abilities and perfect one's art. An endeavor such as a series should be done with care. It might be a good idea to plot out the story in its entirety even before continuing with dialogue/animation. Good luck with your future episodes.
