Watson was last week listed as being one to two weeks away from returning from a ruptured left anterior cruciate ligament he suffered at training last July, but North announced on Monday he would not return for the rest of the season.
Watson, North's second selection in the 2016 draft at No.34 overall, told North Media he had felt pressure to play this year given he was out of contract, but said the club had eased his mind with a one-year contract extension.
"Initially, I was pretty keen to get back and prove myself but as of last week, talking to 'Scotty' (coach Brad Scott) and 'Joycey' (football manager Cameron Joyce), they just gave me the one-year extension so there's not really any pressure to prove myself now, which is nice," Watson told North Media.
"It's definitely exciting seeing the success of both teams this year and (I'm) definitely looking forward to next year, getting out there and hopefully adding to it.
"It's been great seeing Pauly's (Paul Ahern) impact on the senior side this year (following two knee constructions) and he's definitely someone I look up to in that sense, so hopefully I can have a similar role next year."
Joyce said the club was conscious of not putting too much pressure on Watson.
"Given there would only be a few rounds left in the season by the time he'd be ready to return, we felt it was a much better option to wrap him in cotton wool for the remainder of the year," Joyce said.
"We wanted to make sure he didn't feel pressured to get back and offered him the new deal to put his mind at ease and give him some security."
Joyce said Watson had recently started training with North's main group.
"Declan has been pulling up really well and showing some very encouraging signs for the future," Joyce said.