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Help me with my petite living room!

12 years ago
My fiance and I are moving to a home in NJ. We have two living room areas and would like to make this living area seen below into a casual living area and likely playroom for our children (when we have them).
This space is very cute, it's right next to the kitchen. We would also like it to have enough seating so MY IDEA is to place a TV above the fireplace, a rug in the center, 2 sofas on the other sides of the fireplace and 2 small recliners facing the fireplace (if you could picture that in your head). I am not a designer so I don't know if this is the best use of space.

I also don't want to keep the red wall because I fear it makes the space look smaller. Does anyone have any suggestions as to how we can paint (colors) and make the room look bigger and brighter? I saw some people paint adjacent walls different colors. Could that work?

Any ideas are recommended. I would like the area to be classy but also casual.

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