this can be better
suggestions: add a response when getting hit, try some AI to see how that goes, add some jumping,
you might wanna change the controls like 1st player can be; a,d,r,t,y 2nd player can be; enter, ;, shift, /, .,
although it may be better to have a online multiplayer or whatever you feel like, I did like your animation however. :)
now this might not go along with it.....but add some more characters like sakura, gara, lee, pervy sage, ect., and some stages and arena's, go beyond 2 players like maybe 4 players if you can... but not sharing keyboards.
But Dark232 however prolly helped you the most so far :) Good Luck.