A lot depends upon what the rest of the room looks like ( style, furniture, colors, etc. ).

Do you like the color of the current tile? If it were mine I would drywall & reface the entire fireplace up to the ceiling & either remove or install a new mantle , if one is desired.

What material you use to reface depends upon your desired style ( modern, traditional, transitional, etc.)

No I’ve prefer a marble like herringbone tile. My style is transitional here’s an inspiration pic. Not sure I’d this is a beginner diy project or not.

Lol, since I’m DIY challenged I would have to hire someone.

looks like your walls are standard 8’ height. therefore I would eliminate the mantle and extend fireplace surround (whatever finish you choose) to the ceiling. this will help elongate the walls as now the mantle splits wall in half. Of course this will require carpentry work to install surface on which to install tiles or whatever you choose. Id go light with finish material

so many ideas/options.

Depends on how it relates to the rest of the room. Do you want to add a TV, looks like you have the electrical outlet.

Take a photo of the whole room. Your furniture, colors and style info needed. What is on each side? doors? furniture, window?

Are you a DIYer? Budget? The tile is nice, the mantel seems to match your trim in the room, I'd start by styling it differently.

Get a tall vertical framed picture and lean it against the corner (to conceal the deep recess)

then add a vase, either a plant or vase of flowers on one side (in front of the frame on the picture) add something else to the other side...

a stack of small books and a small decorative figurine, a small clock, something that means something to you. keep it simple. Sometimes all you need to do is change up the decor.

^ oh wow that makeover looks pretty great

I tried the tv over fireplace before and it fried my tv. LOL

oncape - thank you so much for the link. I’ll have to see if my diy skills can handle it. 😆