This is how it works:
There are 4 rounds, 4 semifinals, and 1 final round between a charcter and The Oblivion, the fusion of Ogre and Jinpachi.
You may pick a charcter give them a story, who they fight and when a story battle appears. Heres an example:

Yoshimitsu: After defeating Bryan fury, and avenging his comrades, he discovered that a member of the Manji clan, survivied. Yoshimitsu found him, or what was left. The member was a new recruit and a close friend to Yoshimitsu. the recruit was killed by Kazuya. "Now i am truly alone" said Yoshimitsu. "I will have my revenge!!!!!!"
Round 1:Random
Round 2:Random
Round 3:Random
Round 4: Yoshimitsu vs. Heihachi sad Story battle) Heihachi is looking for Kazuya to finally finish him and obtain the devil gene. Yoshimitsu tells him his story, and the two begin a fight to determine who will face Kazuya.
Round 5:Random
Round 6:Random
Round 7:Kazuya vs. Yoshimitsu sad Story battle) Yoshimitsu discovers that Kazuya kill the recruit, because the boy was a pointless creature that was going to die anyway. Yoshimitsu now filled with rage draws his sword.
Round 8:Sub-boss: Devil Jin
Round 9: Boss: The Oblivion
Ending scene: Yoshimitsu stands at the grave of the many Manji clan warriors. Hehachi appears to thank him for defeating Kazuya. Hehachi say he is sorry for Yoshimitsu's friends, and tell him "Do not worry, you will join them soon". And with that, Heihachi attacks Yoshimitsu. Yoshimitsu dodges and runs away. The screen go black and says "The Manji clan only has me. i better not die.