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Online play is technically functional but suffers from low population and legacy server issues. Recommendation: Install the update for stability and balance fixes, but do not expect a full online experience.

Released in late 2012/early 2013, patch 1.03 addressed several key issues:

In tag fighters, proximity and collision rules are everything. Smoothing out unclear interactions made certain moves more reliable as anti-airs or as punish tools. The result: fewer “who won that exchange?” moments and more decisive victories based on reads and execution instead of wonky geometry.

Famously, this update removed the word "Allah" from the floor of the Saudi Arabia stage following community feedback Online Improvements:

Sony’s legacy update servers are timing out.