Play as Heihachi Mishima:
Beat arcade mode with ALL selectable characters.

Unlock Every Charcter:
At the main menu, hold A + B and then press Left, Right, Right, Left, Left, Up, Up, Right; all characters should now be unlocked.

Team Battle Mode:
Unlock Heihachi by beating the game with ALL selectable characters, then beat Arcade Mode with Heihachi to unlock Team Battle Mode.

Thanks to Revolution readers zach darvin and Hunter Hearst Helmsley!