"We need to target less Aussies and more outstanding Kiwis in other teams," he said in Auckland.
"We are talking about focussing our recruitment on outstanding Kiwis in the NRL.
"It is a very attractive option for New Zealanders to come back here, and once they come they are here to stay.
"We need to make an environment that is very attractive for the world class, top 20 Kiwis in the NRL. That should be our hit list all the time. We should know where they are, what they are doing, what they have for breakfast.
"Auckland is a very attractive city and we need to promote a great life for them here away from the rat race of Sydney....including academically, for their partners.
"Our weakness is not having enough players who have been through the (Australian) system. You can't replicate it here."
Watson suggested that many Australian recruits have not been quite good enough.
"If you analyse the sort of Aussies we've had they are often very good but...they are very, very solid players but not necessarily superstars and they are not always early in their careers."
Developing juniors in Shaun Johnson's league was still a priority - the emphasis needed to be on producing first grade players rather than winning the under-20 competition. But there was no way to overcome the difference in standards between the Australian and New Zealand development systems.
- Watson wants a big Australian signing...for his new-look board. He named names.
"I'm looking for a director who is as good as you can get in rugby league - I need a rugby league guy on that board," he said.
"They are bloody hard to find. Craig Bellamy and Wayne Bennett would be great directors. They won't always be coaches - that's the quality of director we want to line up."
- Chief executive Jim Doyle, who is touted as a candidate to head the NRL, was committed to the Auckland club, Watson said.
- Watson - who splits his time between London, New York and Auckland - talks daily with Doyle. "I'm now a lot more involved on a day to day basis."
- He refused to make a prediction for the 2016 season. "Remember at the last change of ownership, when you had those two plonkers saying we are going to be the best team in the league," he said, referring to himself and estranged former co-owner Owen Glenn. "All I will say is we are doing our best to deliver, and that we haven't done so yet."
