Pretty much what I would do. Netflix has such a large catalog, that I don't bother cancelling during periods when I'm not even using the service. If the content I'm interested in is spread through various services, I'll simply sign up, watch what I wanted to watch, then cancel. One month's subscription is enough for me to catch up on a season's worth of some series I like.

This however creates the incentive for providers to start enforcing long term contracts for the regular price, or a much higher price for a monthly plan, in which case DVDs will be relevant again for me.

That's what I do with HBO right now. Only thing I'm interested in is Silicon Valley and Game of Thrones. Once GoT is done for the season, my account will get closed just like I did last year.