This is a crazy good episode, I think there is potential for this as a series as well. (I know you already confirmed on working on the next episode, so with that in mind good luck!)
I'll start with the plot, I really like the simplicity of it because that fits this old 90-2000's vibe you are going for. The idea of humans vs demons in a tournament reminds me of a mortal kombat ladder, as well as the fitting gore style bludgeoning. I love the relationships of the characters and I think their dynamics are fun to see play off each other. Speaking of which, the character designs are great! Gogo and Mama are very iconic and stand out, Nono is expressive and the demon king emperor Koro is goofy but menacing at the same time. The side characters like the Akumugai Ogre team, the announcer and the other humans in the beginning cutscene were also nicely detailed, and I do appreciate that. A lot of times extras are basic or boring to watch.
However, the inclusion of live action is not my favorite, (I do understand newgrounds recently had a 'live action jam,' with that in mind: I am not referring to the emperor of Japan. Sephirothsword57 was funny to see.) the cuts of Japanese advertisements and shows on this vhs distract me, but they do help the episode of punch punch forever to feel like it was on air at some point, in that you were successful. I think it is mainly a style choice, you could of animated a second or two of a fake Japanese commercial to fit the show, which would be a bit more work and also might be just as confusing, or removed them altogether but its just an idea. While on the topic of the vhs style, while I do like it; the fast-forwarding does cement the vhs feeling but that idea could of been implemented in the next episode and each one after it. Just so we can see the full opening just once before it becomes too mundane for reoccurring viewers.
Thank you for not overusing the vhs quality, I strongly dislike when creators portray media with several filters over their work which degrades the quality (too much so). Back to the episode, the voice acting is top notch and the backgrounds are gorgeous. I commend your BG artists on this project! Your animation is stellar, your quality never ceases to amaze me. I enjoyed the action sequences and the character animation when they are speaking and moving around slightly. The sound effects add to the comedy of the piece as a whole, and the jokes fit right alongside the story as well which is really good.
I think my favorite parts are...
-The gore, keep it coming!!!
-The bumpers and the art for them, so cute and polished.
-The ost! Wow its so good, it makes the style.
-Last but not leastly, the opening was awesome. You and Sasaki Kissa did a fantastic job.
Since the genre is comedy, I don't want to take the intricacies of the story too seriously, its an exciting playful show with a simple premise and you make that work really well.
Nice job Speedo!