Why is does my speaker sound distorted?

I've just upgraded from an Apple Watch 0 to an Apple Watch Series 2. I used the 0 for swimming, etc... and never really had an issue with the sound.

I've noticed a problem with the sound coming from the speaking sounded very distorted - almost like the speaker has something pressed against it so it buzzes and sounds tinny. It started yesterday afternoon, and seemed to rectify itself by the late evening. In the last few hours, I've noticed it again.

If I run the little water clearing sound through the speaker, I can see liquid coming from the speaker - so maybe it's water getting in there and when it dries, the speaker sounds ok again.

The strange thing is that I had the series 0 for nearly a year, and I don't remember there being this kind of an issue with a bit of water causing the speaker to sound so bad.

Any other series 2 owners having issues with their speaker sounding distorted? What could this be?