In a display device using a time gradation method, power consumption at a time when multigradation display is unnecessary is reduced. In a second display mode in which the number of gradations is set to two as compared with a first display mode of multigradation, writing of a digital video signal of a lower order bit into a memory is eliminated by a memory controller of a signal control circuit included in the display device. In addition, readout of the digital video signal of the lower order bit from the memory is eliminated. The amount of information of a digital video signal inputted to a source signal line drive circuit is reduced. In accordance with such operation, a display controller sets a display period for conducting display to be long. When the gradation is reduced, a frame period can be also set to be longer than the first display mode.