It seems like a logical step towards improving security of their software, only in case of Netgear I predict their program would run out it's budget quiet soon. This would be like paying for Google Adwords for word "mesothelioma" to be top result, but having $10,000 campaign budget... (spoiler: budget won't last longer than one hour)
Bug bounty programs are a great foundation for securing applications, particularly firmware. However, because of laws in the US that can potentially put white hat hackers in jail, the best results might not come from the bug bounties, but from actually hiring white hat/ethical hackers to perform testing under protection of the company. It's important not only for companies to look to these talented techs, but also to build knowledge and expertise in these areas internally.