Very good progress from the last 2 series. But there are some things that you can still improve on.
1. Too much story, too little action. Even though there was plenty of fights, the length of them seem rather short compared to your previous movies. The problem is that you focused on too many characters and had to cut short on other sequences. This could've easily been two separate movies in terms of storyline covered.
2.The music is a bit off. I like Naruto as much as the next guy, but I don't think the OST fits the setting, but that is a personal thing and not your fault. However the other problem is that your music volume is either too high or the bitrate is too low. I hear a lot of clipped sound, especially at the end (speaking of the bgm only ofc).
3.You really should use a more MK-like font next time instead of an Italic Bold Arial, the letters are very out of place. Color is fine, but adding a bit of a dropshadow wouldn't hurt.
4.While I didn't dislike the backgrounds (which were very well layered and dynamic), a more modern high-res render would really help out with your stage design. Not only will the character sprites pop out more and be more recognizable, but it will also add a more legit atmosphere. They get the job done as it is don't get me wrong, but it's easy to lose a sprite character in the sprite background.
2 and 3 are minor problems, my real gripe is the fighting/story ratio. Here's some good stuff about it:
Dialog (apart from a typo here and there) was surprisingly good, I was especially pleased with Noob's conversation, made me lol.
The action is still your strongest point, even though I said there was too little of it, whatever was there is very well executed. Baraka vs Scorpion was awesome...but short :(
And of course, the character portraits are a major improvement from...well, you know :P
Anyway, TLDR is that while you did improve on many aspects, focusing on the story kind of bogged down the fighting, but nevertheless it was enjoyable. 7.8/10 from me.