That's a great little space. What about making it a reading nook with a fun lamp? I'd put some art on the walls and play up the space.

I thought you might find this Ideabook helpful for some other ideas https://www.houzz.com/magazine/cuddly-nooks-for-every-room-stsetivw-vs~739730

Here are some inspirational pics.

A reading nook is the way to go in your space.

I think it would make a great little home office. I'm not sure how wide it is but, if there is enough space (you need 3-4 feet of clear space between surfaces), you could put a desk surface with knee space below on the wall opposite the cabinets. Then depending on how much storage you want/need, you could add shelves and/or more cabinets on the walls.

I don't know if you are religious or not, but this space can also be made into a prayer space. Candles, religious pictures and statues, books, area rug, Kneel stand.

Or just somewhere to meditate.

On a side note- that cow is really cute.

I agree with everyone. A reading nook/library. I would put shelves everywhere all the way up to the ceiling on all the walls. You could then just fill with books and have fun with it ( all one color together etc.) of course a comfy chair is a must! What a great space!

I just created a small desk and overhead cupboards in a similar small space, now it is a clear zone with a practical function

Thanks everyone for your great ideas!

I'd put a desk in there with maybe just a bookcase. I think it is too small for a reading nook if you have other furniture in there - that will make it claustrophobic and cluttery. Does your house need storage? You might want to just wall it up with a door and put shelving inside for games, movies, toys, etc.. Even better if you had a bookcase that faced the rest of the living room that swung open to gain access to the hidden storage inside that space.

I would turn it into a library or a simple home office.

Now I want a weird space nook.:-)

1) I think if you entertain maybe a bar or coffee station?? how about where the white cabinets are put a wet bar section with some decantors in crystal and all sets , wine fridge, and the top part could be to hold different kinds of wines and Liquors and Glasses, and on one wall some nice art on the other.
2) a nook for relaxing, reading, or Built in napping area especially if you have company or children/ grand children a couple small bunks built in like bunk beds
3) a small office space

Game room

Everyone has great ideas! How about a bookcase to continue the wall and make it a "secret" room?

I agree with njmomma. Your space is perfect for an inglenook!

bookcase all around top to bottom with a beautiful ladder. I would take the fireplace out, looks off in this nook.

If you're keeping the fireplace, I suggest ditching the cabinets and putting in a built-in bench on one side and a floor to ceiling book case on the other....

take out side cupboard keep the fireplace and surround it with shelves and books get rid of all those little nic nacs.... put in a little chair standing lamp or lamp that attaches to the wall

I agree with the idea of taking out the side cabinets to make the space a little wider. Build up the whole area around and above the fireplace with some awesome millwork and just let it be a focal point. It doesn't have to be anything more than that. If you add chairs, etc. it will be so closed in. Maybe just a couple of big poof type ottomans. Keep it clean and simple. Find some great pieces of art to hang on the side wall and light them from above.

If however you are debating the elimination of the fireplace, go with a great home office space. Glass, saw horse desk (Pottery Barn), thick shag area rug and have it face out into the adjoining room. Hang a big piece of awesome art or mirror behind it and some over head lighting.

If you have children, you could make the area into a small play space, or a child's reading area.

What's on the other side of the wall where the fireplace is? I had a space like this but needed extra storage. I walled it off, then created a closet out of it with access from the bedroom on the other side. But if I didn't need the storage, I would have loved to use the ideas you're getting here!

I could see it used as either a wet bar, chill space/meditation room or child's play space, depending on the client's need.

Put a (upright) piano at the end of it, and have music along the shelves on the left hand side

Can you take a picture from farther back and show your living room?

Office! :)

Using what you have, I would clear out the clutter; hang the picture over the fireplace; put the chair against the wall facing the built-in cupboard; and place your Buddah on top of the built in unit. You will immediately have a quieter space and be able to dream and plan for further improvements. Now, this has inspired me to go clear some clutter from my little nook. Thanks! And please post 'after' pics! :)