You need to choose a colour that pleases you but the inside wall of that alcove does lend itself to a feature. If you want more than just paint colour there are paintable wallpapers that add an embossed look to a wall and you paint over that. Check out Bunnings.

We recommend 1.1m in a living room and 1.4m for a bedroom. These are comfortable heights for sitting in a living room and lying down in a bedroom

HU-624382943's comment about speaker placement is important. As far as quality listening goes (whether you like listening to music seriously or want to enjoy fantastic sound when watching movies, you want the speakers on the narrow wall (pointing towards the set of paned windows), not on a long wall. The challenge, of course, will be to get them sufficiently spaced, since you have the bookcase on the right and the cupboard (with or without doors) on the left, as well as the door to the room itself. (That door looks uncomfortably close to the cupboard doors, incidentally.) Unless you choose to suspend your directional speakers from the ceiling – which could be an option – you'll probably be limited to the width of that central section of wall, i.e. immediately to each side of the TV.

It is always a bit difficult when you essentially have three key features (view, fire, TV) that should all have the living area seating orientated towards them. With your current floor plan, I think the logical place for the fire is in the corner to the right of the TV. You may have to ensure that the wall projects far enough that the fire is not in front of the window. This wasn’t the question, but of the two fires that you showed, I preferred the first, more contemporary looking one.