I'm not a coder, so this answer is just the opinion of a lay-person !
My understanding is that a blockchain's speed is limited by it's initial design plus the current transaction load it is processing. Because most blockchains have a lot of junk in the trunk in terms of carrying around all their historical data (the whole point of an immutable blockchain), the speed is usually okay for normal transactions.
Hive is actually really, really fast with transactions seeming to take a second or two most of the time. This is good compared to (say) Bitcoin or Ethereum, where you can wait for up to 30 minutes for a transaction to complete.
But live-action games with graphics, sound, in-game chat etc take an insane amount of processing power by comparison, and it needs to be perceived as real-time by the players. This is well beyond what any blockchain I've heard of could handle.
However, never fear, I am sure there are solutions ! I think the solution could be in a well designed second layer blockchain, or possibly just having traditional type servers to run the game. The key would be distinguishing in game actions (which don't need to be added to the blockchain) from those that count as transactions (which do) - thus, having a conversation isn't uploaded, but picking up loot drops or swapping kit with another player does. The servers or second layer blockchain could upload these to the main blockchain at a leisurely rate.
The only question then is how the game design and main servers or layer two blockchain are funded. Game design is hugely expensive nowadays - forget the amounts you see on Kickstarter, they are just for initial seed funding, a good game can cost more to develop than a Hollywood blockbuster. With the addition of NFT items, you could talking about the cost of creating a whole metaverse. Expensive, but exciting and with huge potential if it works !