My living room layout is very similar! I had my couch horizontal in front of your window creating a entryway, maybe put a console table behind the couch.

Does "formal" imply you have another space for tv watching? A family room? Or is this the only room for tv? If the former? Make the tv more secondary........use an adjacent wall. Better by far as the need for built in expense will be less, and same with media console and tv. As below...and I will hope that is the case. - you've another tv spot. Truly....... the view into the room is far better this way in EITHER case. A room needs to make CONVERSATION possible; nobody wants to shout at another off in the distance. And that love seat can just as easily be two VERY comfortable chairs. One quarter inch to a foot below. Don't forget a great rug.....9 x 12. Lighting matters.......art matters. : ) The very last thing you need? An accent wall via paint. One paint color will do it.....please. You will get more help if you post some inspo pics of rooms/styles you love. There are no mind readers here...

Doing a to scale layout of the room lets you make cutout scale pieces of furniture. You can test out different sizes and groupings. I like sofas with a chaise end paired with a large ottoman to act as a coffee table and an ottoman. Engibneered European Oak in wide planks 7-12" may work. Monarch Plank is one of many different sources. Flat cut rustic works because that species doesn't have open grain like the NAmerican one.

May we have a hand drawn sketch of the room with measurements of each wall, openings, windows, the fireplace, etc. then we can draw up a 3D rendition so we can answer your question regarding a larger couch. Why a sectional? They often take over the room and control what you can or cannot do in the room. This room looks like it is too small for a sectional. We can help more once we have some measurements. Best Wishes.