I personally think that if you go with a corner lounge in this area it will take up a lot of space the rooms that Luke has shown...sorry Luke cut they are way bigger that 2.9 x 3 meters. but if you could get a small modular as Luke says you can separate the pieces that could work. You don't say how old the kids are.... If you have young kids you could get away with things like bean bag chairs and individual seating. I would put shelving and around the TV which I would install in the middle of the blue wall which can be open backed so you can still see the blue wall...and for small kids...use the cane basket and for the big kids...leave it open for their cds and consoles and things. Just think about installing a couple of power points into this unit...Kids always need them. Hope this helps...Robyn

Bravo to all these amazing creative minds. I hate wasting stuff that still has life in it. By the way, though I have read that some pallets are treated with a fumigant which is toxic. Generally, make sure pallets are stamped with “HT”, which means they haven’t been exposed to chemicals (at least not in the treating process.) Avoid unmarked pallets or those with “MB” for methyl bromide. Well, if anyone wants some really nice, bargain 2nd hand windows we just pulled out of our 12 y-o house to make way for a sliding door, and you live around Melbourne Australia, please check them out here: http://www.ebay.com.au/itm/112070272414?ssPageName=STRK:MESELX:IT&_trksid=p3984.m1586.l2649

You already have the timber feature wall pic that first came to mind in your idea book :) Another elegant idea could be 3 or more padded fabric panels as in this pic https://www.houzz.com.au/photos/covenant-hills-contemporary-bedroom-orange-county-phvw-vp~1482108 The narrow individual pieces would increase fabric options and probably decrease cost of fabric. I've also seen padded walls or large panel (eg width to include bedside tables) in a neutral plain fabric and then a smaller actual bedhead in a contrasting bolder print.

Can't resist saying something about sliding rugs, they all slide , I have all wool Persian rugs , Afghani rugs and machine made rugs they all slide, you either put a really heavy table on it or you get non slip underlay . As for feather filled cushions , it again makes no difference cheep IKEA ones are actually better then Coco republic ones , they all slide on leather sofas.